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SAP's Millennial CIO: The Changing Role of IT

Thomas Saueressig, CIO, SAP
Thomas Saueressig
Chief Information Officer
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst
Dion Hinchcliffe, Chief Strategy Officer, 7Summits
Dion Hinchcliffe
Chief Strategy Officer

The Chief Information Officer role is changing dramatically, driven by shifts in expectations from external customers, internal clients, and business leadership. For the CIO, this means rethinking relationships with all these groups. In this episode, we talk with a Millennial CIO to learn from his perspective on the evolving role of IT.

Thomas Saueressig is Chief Information Officer, Senior Vice President, Global Head of IT Services and a member of the SAP Chief Technology Officer circle. In his role as SAP CIO, he represents the entire IT organization internally and externally and is actively rejuvenating the IT organization to become agile, user-centric and business driven with a cloud first approach. As global CIO of SAP, he is enabling new business models as well as optimizing business processes by leveraging the latest technologies and innovations while providing a modern workplace.

Thomas has vast experience in the global IT organization, having led multiple organizations, always following his vision to become a user-centric IT organization and with this not only deliver great user and customer experiences but also change the perception of IT. Starting with building up the Enterprise Mobility organization and leading all cross functions, over to heading the entire IT Project Delivery and Client IT organization globally. Prior to this, he supported Executive Board Member Gerhard Oswald as Executive Board Assistant in his daily operations and strategic projects. Thomas started his career in SAP Consulting where he successfully led multiple CRM customer projects. Thomas was named in the renowned Fortune 40 under 40 list and holds an executive MBA Mannheim Business School (Germany) and ESSEC (France).

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SAP's Millennial CIO: The Changing Role of IT

Dion Hinchcliffe: Hello and welcome to the CxOTalk Episode #236. It’s a Tuesday, June 6th, 2017. We have a very special show for you, today. We have the Global CIO of SAP, Thomas Saueressig, as our special guest. And with us, we also have Michael Krigsman, founder of CxOTalk, who will also be joining us for the conversation today on the Millennial CIO: The Changing Role of IT.

I’d also like to thank Livestream for all their support in broadcasting the show. You can go to Livestrea.com/CxOTalk for a discount on Livestream. And so, let’s get going!

Welcome, Thomas, to CxOTalk. I think it’s your first time on the show, right?

Thomas Saueressig: Yes, absolutely. Thanks for having me! It’s truly a pleasure to be here with you!

Dion Hinchcliffe: Absolutely! And, Michael, glad to have you be with us today, too! It should be a great show.

Michael Krigsman: Hey, thanks so much, Dion! And this is exciting! So, this is part of your regular, every-other-Tuesday series of conversations with CIOs. And, of course, I do my show on Friday. So, Dion, thank you so much!

Dion Hinchcliffe: Absolutely! But we have such a special guest; we thought we would both have a conversation. And it goes back a while! We've done several online shows, not on CxOTalk, with Thomas. We learned his story. He’s part of a new generation of CIOs with a new way of looking at IT, a new way of looking at service delivery, a new way of thinking about working. So, Thomas, tell us a little bit about SAP, about your role you’ve been in for about a year now, and give us a sense of how things are going!

Thomas Saueressig: No, thank you! Yeah, basically, SAP is the world market leader with regards to enterprise applications. That means we want to empower companies in more than 25 industries to run that company best, meaning trust lines of business from marketing, to sales, to finance and all the others, to empower the business. And that also comes along with, at SAP, and being the CIO within SAP; I need to ensure that I support and enable the new business models of SAP. SAP is 45 years old, and we are coming from a licensed maintenance business model, and now, for sure, impressively moving to the cloud which means subscription and consumption-based. And here, we also aspire to become the most innovative cloud company in the world. And as a CIO, for sure, you need to see how to make that possible, how to enable this for SAP as a company, which has multiple dimensions.

On the one hand, how to enable these digital business models, how to make the business process. But on the other side, how actually to provide a digital workplace to the employees; how to make the users of SAP the most productive in the world. And that's certainly part of the role to enable this, actually.

Michael Krigsman: So, Thomas, when you talk about making this change from an on-premise world to a cloud-based world, tell us what is involved with that.

Thomas Saueressig: Actually, this has multiple dimensions. If you look at it from a […] perspective, in a licensed world, you have a big deal, up-front cash, and then you basically monetize it throughout the maintenance period you have. In the cloud world, with subscription, you have these massively […] revenue streams. And this is changing the entire fundamental […]. It also needs to change to a culture of sales, which we see. So, it's a lot of pressure on the sales side, but also, the same on the finance side. If you think about the difference in liquidity management and treasury, which we see, which we need to enable to make that possible. So, this change is going through the entire company end-to-end, starting with digital marketing approaches, starting with high-volume sales processes as well. And that’s exciting as well, to get new sales channels. So, SAP is also happening… We’re going into online sales, into digital sales channels, with the sapstore.com to facilitate the trial and buy process throughout the entire web experience which we offer.

And now, this is exciting from an IT perspective because if you look at it, if an end-user, a customer of SAP, is going to sapstore.com, and gets a trial, buys the solutions, all online. Basically, the idea is to make that without any human interaction. So, 100% optimized and automate the entire process. So, IT is becoming part of the value chain. And that's exciting that you're not only supporting these things but basically, you're the fundamental enabler of the technology platform to have these new business models enabled.

Dion Hinchcliffe: Right. Well, this takes this […], we’re in a new era of IT as you’re talking about it becoming its own P&L in its own right and becoming part of the business. So, what do we look at? What is the optimal role of the CIO today? The role is clearly changing, you’ve seen my writing, the things I’m talking about; you know we need to be much more customer-centric; we must be talent magnets because we need people who can build that digital future with which we'll run our business. But, what do you see in the role of the CIO? And does it change by industry or company, or is it really kind of a new perspective broadly emerging?

Thomas Saueressig: I think you’re pretty right. In the core moment in time, when you look at the technology which we have at hand, IT needs to lift the role to have this custom experience in the center of all those activities and, to talk about business outcomes. It’s not about providing a solution here or an education there. It's not about operating infrastructure. It's talking about the business outcome of the company that we can drive with our activities. And that’s a different level of discussion we need to have because…

That's also if you think about the cloud. A lot of people, if they think about cloud, talk about, "Oh, I just want to move workloads from A to B," when they talk about technologies or something like that. But fundamentally, the advantage that CIOs now have with leverage in the cloud, is that you can get rid of commodity service that you, for yourself, can focus on the whole value chain of the company.

I will give you an example. If you are in a certain industry, managing data centers, managing service and all the replacement depreciations and something like that, basically, you spend a lot of time from an IT perspective. And those kinds of topics. But these are not part of your core value chain because your core value chain is most probably having a great customer experience, having a great go-to-market, enabling new business. But it's not about the data center or operations, which means, if you now go to an infrastructure-as-a-service provider, and you get rid of your infrastructure, you basically free up mental capacity. And that's important for you that you can spend your valuable time and to keep differentiating things for the company. And it's a different kind of thing how to fuel the cloud. And that just was one example with regards to Infrastructure-as-a-Service.

The same, we have with Platform-as-a-Service and Software-as-a-Service. You need to see how you can focus your entire energy and those of your organization on core value-delivering, differentiating capabilities for a company. And that’s…

Dion Hinchcliffe: And that’s very interesting. So, it sounds like you’re a major proponent of outsourcing in somewhere, offloading in some way, the tactical aspects of IT; the lower parts of the stack, if you will; and focusing on the strategically significant bit of the business, to the core of what the organization does. Is that correct?

Thomas Saueressig: Absolutely! You need to focus on exactly this value at which we deliver as a company. And that, for sure, means, on the one hand, what I mentioned with regards to business processes, but also, never forget your end-user; your employee; who is working in your company which you want to make the most productive in the world. And that's… Because thinking about SAP, SAP has no warehouses. We don't have a large supply chain. We don't have production chains. So, in my case, if I want to increase the productivity of SAP, it's only working on improving the productivity of the employees. And that's the reason why we changed our strategy to become a user-centric IT organization. And that's a very fundamental decision which we took to place the user, the internal user, or an external user, in the center of our activities. Because, it also comes as a […] how an IT organization needs to work to serve our users in all regards, in the entire delivery process as well. And that is, I think, a very important factor as well.

Michael Krigsman: Thomas, how do you create an IT organization that is user-centered? So, in other words, when you say “user-centered,” can you drill down and elaborate what does that mean, exactly?

Thomas Saueressig: Yeah. Very good. And that’s exactly [it]. It starts already with a project initiation. So, if we talk about new projects which we deliver, we changed [to a method where] we purely talk about user stories. What is the impact we generate by the user? What is the change of how he's working in the future when we do that project? If we are not able to articulate that in a solid way, then most probably, we don't have exactly the knowledge of what we need to do. And we need to clearly can articulate that change. So, user stories, the user value; each and every single activity is key. But it also means we need to involve the real end-users, not a business operations team or our sales organizations. We involve real account executives together to validate our mock-ups, our prototypes. And this is also something which is very important. You need to make it transparent. The people need to see to understand what it means. And that means a lot of markups, a lot of prototyping, but involvement of the user to validate and give feedback along the way, in a very iterative way.

So, you could for sure, say agile will help, because you have more iterative ways to develop your application. And for sure, end-user testing is key. And again, I mean the real end-user, not the business operations team. Fundamentally, if you do approach it, you need to also ask the user afterward, after a couple of months, "Did the change we aspired to really come through?" So, the user service and the user feedback is essential for us. That’s the reason why we have regular IT client satisfaction surveys, regular employee surveys at SAP overall, but also what we did within our organization…So, each and every […] application and each and every single mobile application we have, has the possibility to drive straight feedback from each end-user directly to a responsible product owner within IT. And that means every real response that's accountable for IT gets rated feedback [that's] positive, but also negative. And that's very important that we have a straight direct, communication line from the end-user to the IT because we don't want to hide in between our buildings. We don't want to hide behind processes. We want to go center-stage to the users. We also do a lot of activities and campaigns to get the straight feedback from the users. That’s a key thing which is important for our culture; taking feedback with services.

Dion Hinchcliffe: And if you say you can put the users on center stage, and your leadership is well-known over the last year or so in talking about empathy as a key focus ... One of the things that were really interesting about the new Gartner CEO Survey is that most companies don’t seem they actually have KPIs around this. How does empathy appear at the top level? I mean [to] measure it. Do you guys have a KPI, or are you managing to that? I mean, how do you make sure that you’re actually doing that follow-up at the very end to make sure you deliver the right solution?

Thomas Saueressig: Exactly. And so, certainly, that’s something which we established in our delivery process that after each and every single project, we send out projects so it's to get feedback around it and that we, as I mentioned, have these regular client satisfaction surveys for the IT solutions.

We also have some service projects throughout the year for specific areas with high usage. And, this is something everybody has on my team in his goal settings, actually, to really get closer to the user to get this feedback and mention that very seriously. Actually, also, the specific KPIs we have around client satisfaction where we for sure want to continuously increase the client satisfaction, even if we are already actually, based on benchmarks we have, under the top 10% of IT organizations. But again, our aspiration is high to even [the] product first. Absolutely.

Michael Krigsman: And, Thomas, what are the skills and the capabilities that need to be in place inside IT to make this happen? Because, clearly, when you talk about empathy, you’re not just talking about empathy for the computers and for the wiring in the walls. There’s something beyond that! [Laughter]

Thomas Saueressig: [Laughter] Absolutely! I think the mindset is a key topic anyway for an IT organization because you need to have a mindset that people really want to help people on every occasion. Not hiding between processes, but really understanding that process is just made [so] that they actually should help people; and if they don't need [help], to treat them. So, the mindset is a key topic. But, if you talk about the roles and the skills within the IT organization, you can receive that as a change for multiple reasons also based on the move to the cloud.

On the one hand, we see changing technology skillsets. So, if you take the classical SAP IT organization, where you most probably have a lot of hard skills, now we see SAP cloud platform with new technologies. We now talk about Java, JavaScript, […], CSS, and the like. So, you see, on the one side, the technology shift of skill sets that we have, but on the other side, also considering the multiple cloud solutions made most probably used, actually. You also see more need for orchestration, so cloud orchestration: the integration capabilities to integrate the multiple best-in-class solutions in terms of a seamless end-to-end process. So, integration skills are absolutely key. For sure, security is something which is must-have; to have the right focus on security throughout this entire enterprise architecture which you have in mind.

So you see, actually, different roles which are now getting more center stage in the core, and between the past couple of years. So, we've certainly … We see that change. And also, what is quite exciting to see, we need more business skills in IT, actually. We need to be able to consult more and advise the business as well because if we embrace best-in-class public cloud solutions, for sure, we can do a lot of configuration. For sure, we can do some extensions and differentiating applications on the Platform-as-a-Service, like […] platform. But still, this is also that we now need to take a different role advising to the business to make it work.

And I also believe if you see the multitude of cloud solutions between […], IT is the central organization to need to make that work in a holistic way, to have a seamless integration. Because, at the end of the day, if you talk about the need to cash the process, this needs to be tightly integrated. It doesn't help you if you have spots and you can see point solutions there. We need to talk about customer master data. You need to have that straight. So, data quality is a key aspect in the cloud. And that's something, if you think about all those aspects, we need to come together. You see actually an increased relevance for the IT organization, especially in the cloud to make that work. And that’s something we’re I believe we see a push also in the next couple of months that IT needs to have a stronger role in orchestrating this entire enterprise architecture, end-to-end.

Dion Hinchcliffe: Yeah, so we heard you talk about the business, you know. We've always had this classic divide between IT and business; the IT department software in their own building in many organizations even today. But, you're [part of] a new generation of CIOs that are coming in and looking at things with different eyes. And as I hear you talk about things like the cloud that I heard you talk previously about, your belief in being responsible for stakeholder happiness, which I've never heard CIOs talk about; can you talk a little bit about your guiding approach or philosophy of IT at a high level? Where is this all going? Are we going after the cloud? Are we going to manage happiness in the end? What’s going to happen there?

Thomas Saueressig: Yeah. As you mentioned, I mean certainly … As I mentioned, I mean … Our key purpose for the IT organization is to enable SAP to become a digital enterprise with happy end-users. That’s basically the progress of the IT organization of SAP. And what you see is multiple aspects of the purpose. The one aspect that we briefly talked about is digital enterprise. What does a real digital enterprise mean? And here, I have always referred to, on the one hand, digital business process and new digital business models. And on the other hand, the digital workplace; how do people work? And at SAP, I mean, we have more than 190 locations, more than 86,000 employees around the globe and you need to bring them together and you need to connect the people because I also fundamentally believe that innovation is only happening by connecting people. A diverse set of people. And that’s where IT needs to have a huge role to make this digital workplace happen in that way, to try, actually, innovation at SAP.

On the other hand, you also heard the sentence "with happy end-users." And that means, with all our functions, from project delivery, from IT support, IT operations, all the functions, I mean, they are customer-facing. They need to ensure ... They need to have an emphasis upon the end-user when an application's not working. When something's not working, they have a huge pressure point because they also serve our customers; which means, are you really ensuring that IT organization has the empathy to serve our employees? And it needs to [be in] the best possible way because they are in a pressure situation as well. And this is a very important topic.

And, this comes along with some guiding principles, for sure. User-centricity is one principle I already mentioned, which is totally key. The next principle, which is also very important is Agile. And when I talk about Agile, it's not purely about the project methodology what Agile means, like “strong or […]". I also talk about the culture around it - from a mindset perspective, that you are adaptive to change, that you are actually positively reacting to change, and [what] change requires. And that's something, especially for the IT organization, [that is] very important because the business is a paradigm and we are in an exciting market these days with changing business models. So, we cannot just say, "Oh, we now work on this project for the next one year, and then we have an outcome." That will not work. We need to see that, first of all, we have quick results and business outcomes on the one hand, and on the other hand, when something's changing, we need to be able to react on that in a very positive way and make that also work.

So, user-centricity, Agile is key. Then, for sure, for the aspect of the cloud: That also, here, again, is the notion that we not just want to have the cloud for the sake of having the cloud. It's really about that on the one hand, quickly delivering innovations and value to our end-users, but also to ensure that we have the right level of focus and key differentiating aspects of our […] and not just on the commodities that exist by the side. That's also an important key element.

And, with those, we had leading, guiding principles. We drive the IT organization [with them], for sure, supplemented with one which should never be forgotten which is part of each and every IT organization, is that of rock-solid operations. I mean, stable operations are the key for each and every single company in the world. We need to ensure business operations. And that's the foundation where we, then, at the end of the day, build on our innovations on top of that. If stable operations are not given, nobody will thank you for the innovations because you need to get that right. And that's even more important that you have the right level of, you know, working models in place; operating models; to have stable operations so that you are going to focus on innovations, on value delivery, for your business. And that will also lift up your discussion that you have.

Also, if you think about topics like enterprise architecture, enterprise architecture is a key asset every IT organization needs to have - having a plan [for] how to transition from today's world into the new world, actually, into tomorrow. And when I talk about the enterprise architecture, this is nothing where I would reduce to any IT topic. For sure, it compromises the application architecture. But, it for sure should also have data architecture [with] roles and processes included because, at the end of the day, you want to talk about business capabilities. So, business capabilities are your anchor point where you talk about your lines of business. That's what they understand, and that's what you want to improve. Business capability. And the business capability itself is set up with different applications, data models, data points, role to fulfill this specific business capability as well as the process. And, now, you can tweak those four dimensions to improve your overall business capability.

And, this is something you also need to come into multi-year discussions with them [about]. So, if you talk about a business strategy, about a line of business, for the next three years, basically you want to see what that means for the specific business capability. And with that, you turn around the discussion from a pure IT I want to replace with an ERP system that forces them… What exactly is the business capability I am sure I want to improve? My liquidity management? My cash management? What do I want to do with real-time analytics on top of that? So, we need to go away from an application or IT-centric discussion as well.

Michael Krigsman: So, clearly, there are many, many moving parts to this. And I want to remind everybody that you’re watching Episode #236 of CxOTalk. And, we are speaking with Thomas Saueressig, who is the CIO of SAP. And, we have an interesting question from Twitter. Sal Rasa, and in a way, gets right to the heart of what you were just talking about, Thomas. And, he says, "How can IT become a hub for digital transformation internally, to make practices and processes like HR more modern and bring innovation? So, it gets right to the heart of the issue.

Thomas Saueressig: Yeah. I think that’s a great question because if you talk about digital transformation, the important piece is that it’s always coming along with multiple stakeholders. It’s never only IT alone. It’s always complemented by the various business functions, and that’s the important, key aspect. Also, each project which we do, they are business-driven. So, we talk about what do you want to achieve with the business? So, in this case, with regards to HR, for sure, you need to talk with HR about the plans for how to […] for talent, which means, how to increase the […] to get the best talent, to recruit the best talent. And automatically, you have one component: recruiting. How do you prove the recruiting in a digital world? Like, with online recruiting; like machine learning that you automatically screen the right CVs, actually, fitting to the job description. And then, you already discuss how to improve that business capability actually using machine learning for recruiting.

The next topic is for sure that you want to have an employee experience throughout his entire lifetime at a company. So, starting with onboarding, what do you do with onboarding? How do you get the best level of education right to the employee? And this is for sure complemented by [something] that they get right away: they want the best possible key setup. But here, these are the discussions, then, which need you need to have with the business organization [about] business capability [while] leveraging for sure the modern technology to support it. But also, really thinking about how you are getting leverage - like, innovations like machine learning into each and every single one of those processes to make them more efficient? And then, basically, we transform business functions; we transform the line of business that is there, and even more importantly, we also need to see the interfaces between the lines of business. If you talk about HR, it never should be only the internal organization.

We also need to talk about the external workforce. And then all of a sudden, you have global procurement as the next line of business joining again because you won't have a total workforce discussion; which means your internal and external workforce, and how you actually develop your entire organization and derive skillsets and roles. And now, you have to bridge the gap between procurement and HR to make it transparent, and also the reporting throughout the entire total workforce discussion. And here, you see, by focusing on business applications, and, as well, the interfaces to other lines of business, the IT function would actually be the glue between the entire company. And that’s what you need to recognize, and that’s where you need good people in your team to actually bridge the gaps, respectively build up the bridges between the lines of business.

So, IT, in my opinion, has a huge need, [to have a] collaborative function throughout the entire company. Because there are not many functions like HR who are [relevant] across each and every single line of business […]. So, you do see that interface as an IT organization. And now, it’s also your […] job, actually to go fix it and go bridge the gap between some line of business […]. And this is something I can just recommend to everybody: highly collaborative [role] to really join the forces with the various business owners and make that work. And again, think of the product picture across lines of business; not just HR.

Michael Krigsman: Dion?

Dion Hinchcliffe: So, if you’re talking about a very holistic view of IT, and I think that encouraging … The question was about this IT as a digital transformation hub. Let’s draw on IT and that hub: is it to cultivate innovation from the business, or is IT really supposed to lead innovation? Or is it really a partnership, and if there’s a lot of discussion about who’s going to be driving digital transformation these days?

Thomas Saueressig: Yeah. I mean, at the end of the day, if a company itself is becoming really digital, then it means that each and every single function of the company needs to be digital. And then, all of a sudden, you have a different [feeling about] the topic of Chief Digital Officers here, CIOs here, CMOs there. I think this is something where when you have the right level of maturity, I mean, everybody should have that in their DNA to think about digital. But, we are not in that moment today, which means today, for sure, there are various functions [that] push a lot of business functions into that direction, which makes sense. But, at the end of the day, it's a partnership approach, which is the key to success. So, collaboration, what I meant [before], is required.

But if you think about innovations, technology innovations like artificial intelligence: I certainly have the aspiration that the IT organization needs to try because we are close to the market. We know what's technically possible. We see that every day. And for sure, we need to look at how we could best leverage those technologies to involve it within the business processes of a company. And that's where, for sure, the IT needs to drive that innovation and discussion in the company to push the various business functions. And also, at the end of the day, with that, inspire our customers to have a customer experience which is exciting to see, because they get the right […] at the right moment in time. And again, technologies like artificial intelligence will help, and you need to try that and bring that into the company.

Michael Krigsman: Thomas, you mentioned earlier the importance of IT operations and maintaining stable systems. And so, how do you now manage to maintain infrastructure and have skill sets that are necessary in order to maintain infrastructure and do that really well? And projects; standard project management and so forth, and project portfolio management? How do you do that and at the same time maintain IT as a highly innovative force inside the company? It seems like there are very different skills and roles and requirements. How do you do that?

Thomas Saueressig: Absolutely. I mean, it’s certainly clear that as an IT organization, each and every IT organization has that challenge. And one insight providing stable systems and to create operations. On the other side, to drive quickly and agile innovations. I think this is something every IT organization is faced with. And now, I believe … And we also heard a lot about bimodal IT and topics like that. And I think, from a conception discussion, it is highly exciting to talk about a bimodal IT. But fundamentally, it's about enabling a two-speed IT architecture where on the one hand, we have stable systems, but you need to be able to [quickly] build up […] innovations on top of those. And this is something where such an architecture is the essential driver for that success.

I’ll give you an example, actually. For sure, every larger enterprise has a hybrid landscape. It has some cloud solutions and has some on-premise solutions. That's for the larger enterprises certainly as setup which is on the market. And now, you will see some on-premise systems where you have delivery cycles where you have perhaps, once or twice a year, a release. But still, you want to provide on a monthly basis, perhaps, innovations for this specific area.

What we did actually at SAP to enable this two-speed IT architecture is actually leverage the SAP cloud platform. So we exposed services from the premise system to this SAP cloud platform. And now, at that moment, I can now start building a new application on edge for these on-premises to continuously evolve this and use the stable APIs […] on-premise system. So, I can iteratively improve the applications, the experience for employees, and actually, still have the stable operations on an on-premise system as well.

I’ll give you one concrete example how we did that to make that really crisp. We had actually, at SAP, two on-premise ticketing systems. One for IT tickets and one for business tickets like for all the shared services, and for finance, HR, travel, facility management, and the like. And the employees of SAP came to me and said, “Look, Thomas. I really don’t understand why we have two ticketing solutions. I want to have one system where I can, you know, glaze my ticket, and actually, one system where I get my inbox where I get the solutions." And, quite frankly, five years ago, most companies would have probably started a massive migration project from one on-premise system to the other on-premise system; which you know you need to align the categories, you need to have some data migration. It would be a two or three-year program, and at the end of the day, you just have, you know, the outcome that you have […] for the tickets.

We actually decided against those. We [also] kept on-premise systems, but we build a new application on top of the SAP cloud platform, leveraging functionalities and business rules out of these on-premise business systems. And now, we are responsive to sign for each and every single device, and that means within the six weeks, we were able to provide this unified ticketing application with one inbox and that now, this is the starting point for an exciting journey. First of all, the employees had quickly this innovation and this great user experience with […] on each device, so only one system. But now, actually, […] our paths. So, the second step was, we used the public cloud solution, SAP Chain, where we have the knowledge database of SAP. And, employees going out to this floor application can type in the keywords that automatically get all the relevant knowledge articles that, perhaps, actually, you don't even need to create the ticket [for]. Because, for sure, the IT organization would want to try to reduce the number of tickets because as an outsource partner, I would need to pay for tickets. Which means, now we [would] combine two on-premise systems, and one public cloud solution, with this SAP cloud platform application on top. So, that was the second iteration.

And the third now was with machine learning, because in the machine learning services of the SAP cloud platform, basically, we are able to include and introduce the application in an internal round, which is just amazing from … It was also four weeks only, and now an employee is typing in a description. Basically, we can automatically determine the right category, you know? Ticket classification that we brought on the first level depending upon who is the responsible team because sometimes employees just choose the wrong category. And, we can automatically provide the right solution, which we have in our knowledge of the business as well.

So you see, we still live in a hybrid world, two on-premise systems, one public cloud solution, but we leverage this cloud platform for iterative and agile innovations in a quick way, harvesting and leveraging innovations we did actually in the past. But, the employees quickly get these innovations. And still, we have two very stable on-premise systems in the back-end for the functionality which we have in there.

And now, the exciting piece if you think about it, from an end-user perspective, you have created your applications in the cloud working on every device, where you get, every month now, innovation. So here, actually, the end-user ... He or she doesn't know what the back-end system is anymore. And now, it's actually IT who can charge, "What do we do now with migration? Do we wait? Do we migrate to a public cloud solution at some point in time?" But that's decoupled from the user. And that's also giving us a good position in our enterprise architecture discussion on how we handle it. Because from a user perspective, we solve the issue, and even more, we are giving innovations now on a regular basis to the end-users based on the agile two-speed IT architecture that we have. And I think that’s a great example where such an architecture can help on the one side, stabilize operations; leveraging investments; but also having this possibility for quick innovation on top, which is essential because nobody will wait for IT. We need to be quick. If we are not able to show quick innovation, for sure, the line of business will ...

Dion Hinchcliffe: Absolutely. I did a CIO survey, which in fact, you recently participated in, and we clearly saw 96% of CIOs are either under significant or great pressure to move faster. But, when we look at how to do that, I mean, you mentioned siloes earlier on in our conversation. And, you know, we've had IT around for nearly 40 years, and we've been having the silo conversation from the very beginning. How does a CIO cultivate the right business relationships? What advice do you have? I mean, you talked about procurement. You talked about HR. You talked about accounting functions, time to cash, and lots of other interesting things that touch into the different business areas. How are you pulling them together? What would you advise CIOs to do to get better at that?

Thomas Saueressig: Yeah. I think the most important advice is most probably that you shouldn’t care about the recognition because I believe that we can achieve so much if just avoid the discussion about the recognition for success because it's a show and game. And if you actually help the business users and the business owners to shine, and to have success, they would love to really work with IT because they know that actually, they are better off with working together with IT. So, that's a very important topic and dear to my heart because, at the end of the day, it's about the user, it's about value for the company which we deliver, and not about individual successes. And that's the first, very important aspect.

And the next aspect like this: You need to be proper. You need to be able to connect multiple people in the organization. And by connecting the people, you need to show that they are all … that the sum is more than the parts. And, that’s something which is very important to translate, actually, to your business owners as well. So, the key aspect, and again the recognition aspect from a psychological aspect that you should not forget. And, I think IT can be a great enabler for that. And, they will highly value and appreciate your support, actually, in making them successful, because refer to what I said in the beginning. It's about the business outcome, and that's what we should have in your mind with that way from an IT perspective; that the business is successful with what they do with the end-customer of SAP; or, in this case, our business units; is more successful. It's not always about the success of IT. That is always the wrong discussion. It's always the success of the business.

Michael Krigsman: But, Thomas, does the business also need to learn how to relate to IT in a new way? Because, the business, historically, has looked to IT to be that kind of services provider of technology. So, what does the business need to learn?

Thomas Saueressig: I think multiple aspects. I mean, certainly, they need to learn that in a new world, when you see all that technology and innovation, that it is a digital world, nowadays. And that means you need to get out of traditional thinking morals to see how can each and every single company in each industry now really become digital? And that again is going throughout the entire organization, from marketing to sales, down to the support organization, finance organization; and here, IT plays a fundamental role in enabling that. And each and every line of business needs to understand that, again, it's only working together with IT also across boundaries to make that work and to leverage these new technologies, and also new thinking about it.

I mean, the IT organization also needs to provoke a discussion within the company to say, "Look. If we now take this, why can't we enable this digital channel for our company? Why can't we provide a different level of support? For instance, why don't we have a social support? Why don't we have chat support?" And actually, by the way, when we have support, why can't we use chatbots, actually, for the first level in a large way? So, [we are] dealing now with these new technologies influencing the core value chain in improving those [channels]. And this is something where for sure, with the technology we have, you can go into these value chain discussions and improve that end-to-end. And that's what you actually need to do, and the business needs to acknowledge that without the help of IT, it would be a very difficult option.

Dion Hinchcliffe: Yeah. That makes a lot of sense. And, yeah, so this is … All this conversation takes us to the evolution of the cloud, the push for innovation and digital transformation, and it really brings us to the question of where does the traditional operating CIO go as opposed to innovation-driven or digital CIOs who are focused on the forward-looking aspect of it? We know that 80-90% of the CIO budget goes to operating what we call "Legacy Mountain," right? All the things that we build up, […] in most organizations, literally hundreds or even thousands of legacy applications which are important, but as you said, they're really becoming tech where that’s something you should figure out how to offload in some way. What’s the future, you know? If we’re looking five or ten years ahead, where is this all taking us?

Thomas Saueressig: Yeah. And I mean, you are spot-on. Certainly, every year, we need to work on getting out of the operation or […] into an innovation-driving function. Otherwise, you become irrelevant because somebody in the company will take that role because no company can wait. You need to innovate consistently, and you need to have an IT organization who can do that. So, if you focus too much on … Or, if you only can focus on operational tasks, then you are doing something right. And you mentioned it: If you talk about the move to the cloud, then certainly, this is about offsetting some of your commodity services to providers. So, if you talk about infrastructure, pieces move to the infrastructure [of the cloud.

If you talk about a certain commodity service, which you have on-premise systems for, put them into public cloud solutions. Invest in cloud Software-as-a-Service solutions so you don’t need to worry about those anymore. And you orchestrate this. And then, with the freed up capacity and resources, you can again turn them into focusing on the core value chain and differentiating capabilities, and you need to do that. You also need to be able to work on functions in your organization, really working on enterprise architecture, innovations; really keeping the focus on the latest and greatest innovations doing some proof-of-concept, and to see how this could influence the existing distance operations. And that's something which is important, and you need to be able to do that. And, moving to the cloud on all the different layers will actually help you in this journey.

And that's what I mentioned in the beginning. You need to get the mental capacity of your organization focused on the key topics, and not commodities. But for sure, there's a lot of work. You will have hybrid scenarios along the way, because in the next couple of years, by using something like this SAP cloud platform as an agile innovation platform, these are elements which will make you successful because you can continuously innovate and on top of those, leverage the latest and greatest technology already along the way - because you also need to gain time. And that's the important piece as well because this is not a transition from day to the other, but you also don't have now three years where you say, "Now, I have three years [to] clean up my enterprise architecture." Nobody has that time because the competitor will already have passed you in three years, which means, you need to see how you can have this quick innovation value and in services on your organization as well. And again, you’re right. I mean, if you don’t live up to this innovation and master each and every relevant role from an IT perspective, somebody else will take that.

Michael Krigsman: Thomas, we have about two minutes left. So, just in one minute, you’re a Millennial CIO. You’re one of the few Fortune-500 Millennial CIOs. And, does that come into play, just in one minute? Is that relevant? Does that come into play? What about that?

Thomas Saueressig: I think actually, if you talk about Millennials, it’s not about age. That’s very important for me. It’s not about age. But, it’s about a different kind of mindset and thinking which is coming into the workforce, and you need to ensure that with the services due to arrive, that you have a different level of how you serve your end-users, how you serve your customers, how you want to deal with innovation, how you want to actually adopt innovations in a quick way. And this is something where a Millennial, for sure, has a huge interest to get the innovations out of the door; to get the close user feedback; to have new ways of working. I mean, if you talk about how people want to work in the future, for sure, this is something where we need to provide greater answers to have this digital workplace; to be able to work everywhere, anytime, where you are, and in the best possible way. And these are topics where I believe a different mindset is now coming into the organizations, and that’s the prime factor. But, it’s not age.

But for sure, I believe the new workforce which we see will change how companies function. You need to think about different leadership skills; how you lead, actually. Millennials and actually, the grown workforce with that mindset … And this means, yes, from a mindset perspective, there’s a lot of topics where I believe there will be a huge push into each and every single level of the company.

Dion Hinchcliffe: That was fantastic! Thomas, we really appreciate you taking your time to join us today on CxOTalk and sharing your thoughts on how IT is evolving, how we’re connecting the business and IT, becoming more agile, moving to the cloud; so that was a fantastic discussion. And you will be able to see this on YouTube in a few days. And we would appreciate your time. Michael, do you have any closing thoughts for us, today, as we talk to the CIO that’s […]?

Michael Krigsman: I thought it was so interesting, Dion, to hear the way Thomas thinks about placing the customer as the reference point. And, it’s not just language, but he has built up the IT operating model and the enterprise architecture all thinking about that. I mean, don’t you think? Isn’t that interesting?

Dion Hinchcliffe: I think it's unique with respect to how he's connected a very direct line between the customer and the way IT operates. And, not just during the initial process of engaging the customers, because this is the old requirements […], but all into the very end of the afterword saying, "Did we do the right thing?" So, I think that kind of … That's real customer-centricity and I agree that coming up with the enterprise architecture behind that is really the hallmark of I think the next generation of IT.

Michael Krigsman: And of course, we’re talking about IT. We’re not talking about the marketing department. We’re talking about IT in exactly the same language that the marketing department might speak about their relationship with customers and end-users as well.

Dion Hinchcliffe: I think it’s a very consumerized view of IT, and that’s the future. And, I always enjoy talking with Thomas. He has a very fresh perspective; a different one than we’ve heard before. I love this discussion about happiness and the whole message around empathy. It’s the right thing and it’s hard to actually do. It’s always been hard to do in IT and we’re seeing now a sign that it can be done much better than it has been. So, very good start.

Michael Krigsman: Well, clearly, there’s a lot more to talk about. So, Thomas Saueressig, thank you for joining Dion Hinchcliffe and me for Episode #236 of CxOTalk today. Thank you so much, Thomas.

Thomas Saueressig: Thank you!

Michael Krigsman: And Dion, I’m the interloper on your Tuesday CIO show, so thank you for allowing me to interlope, as they say. [Laughter]

Dion Hinchcliffe: Always a pleasure, and really glad you can stop by, Michael. Thank you for coming.

Michael Krigsman: Everybody, we have another show on Friday and tune in. And, come back. Take a look at CxOTalk.com/Episodes to see the always current schedule. And while you’re at it, you should “Like” us on Facebook. [Laughter]

Dion Hinchcliffe: [Laughter]

Thomas Saueressig: [Laughter]

Michael Krigsman: Thanks so much, everybody. And, have a great day. Bye-bye!

Yahoo CIO: Rethinking Information Technology

Ben Haines, CIO, Yahoo
Ben Haines
Chief Information Officer
Yahoo Inc.
Dion Hinchcliffe, Chief Strategy Officer, 7Summits
Dion Hinchcliffe
Chief Strategy Officer

The technology industry is changing faster than ever, demanding new types of leadership to ensure IT systems meet the sky-high bar that is set across the sector. Growing workforce expectations in tech firms, combined with modern technologies, have pushed even leaders in Silicon Valley to innovate further and improve service delivery while embarking on ambitious programs of digital transformation. In this episode, Ben Haines, Enterprise CIO of early Internet pioneer Yahoo, shares his ideas on rethinking IT to meet these shifts head-on in today's exponential digital era.

Ben Haines leads a team of over 400 people in enterprise IT at Yahoo. His responsibilities include ensuring all Yahoo workers are productive, from all corporate applications to the help desk. Ben Haines was previously the CIO at Pabst Brewing Co. as well as the former CIO at Box. He is an enterprise IT and business professional with over 17 years IT leadership experience. This visionary strategic executive has a focus on short-term execution for immediate results while developing a wide-ranging point-of-view the challenges and opportunities of today's IT fast-moving IT environments. Ben understands how to embrace new technologies responsibly while managing large budgets, executive expectations, and shifting end-user needs.

Workday: Women in Tech

Friday 6/30/17   1:00 PM ET
Add to Calendar   06/30/2017 01:00 PM 06/30/2017 02:00 PM America/New_York Workday: Women in Tech Boston Workday is an important player in the enterprise SaaS market, with consistently high customer satisfaction scores and recognition for being a great place to work. Workday also holds the distinction of have four female C-level executives. On this episode we speak with all four these execs, discussing their roles and how they collaborate. It's an exciting and special show! MM/DD/YYYY
Ashley Goldsmith, Chief People Officer, Workday
Ashley Goldsmith
Chief People Officer
Diana McKenzie, Chief Information Officer, Workday
Diana McKenzie
Chief Information Officer
Christine Cefalo, Chief Marketing Officer, Workday
Christine Cefalo
Chief Marketing Officer
Robynne Sisco, Chief Financial Officer, Workday
Robynne Sisco
Chief Financial Officer
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

Workday is an important player in the enterprise SaaS market, with consistently high customer satisfaction scores and recognition for being a great place to work. Workday also holds the distinction of have four female C-level executives. On this episode we speak with all four these execs, discussing their roles and how they collaborate. It's an exciting and special show!

Christine Cefalo is Chief Marketing Officer (CMO) at Workday. She oversees the global marketing organization, with responsibility for building the brand and creating customer demand in markets around the world.

Diana McKenzie is chief information officer (CIO) at Workday. She oversees the company’s security and global information technology (IT) organization, with responsibility for the internal deployment of Workday products as well as other innovative technologies and programs that create a competitive advantage for the company and serve as best practices to IT organizations globally.

Robynne Sisco, is the Chief Financial Officer at Workday and is responsible for all aspects of the company’s finance organization,including accounting, tax, treasury, and financial planning and analysis.

Ashley Goldsmith is chief people officer at Workday and has global responsibility for human resources, internal communications, global impact, workplace facilities, and the Workday Foundation.

IT Innovation for Competitive Advantage

Tayfun Yigit, CIO, Index Group
Tayfun Yigit
Chief Information Officer
Index Group
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

The Index Group, one of the largest distributors of computer products in Turkey, has been in business for 27 years with $1.2 billion in revenue and 40 percent market share. A combination of aggressive competitors combined with changes in consumer buying habits forced Index Group to rethink how it uses IT to gain operating efficiency while supporting new business models and ways of working.

Listen to The Index Group's Chief Information Officer, Tayfun Yigit, explain how the company changed its approach to IT and replaced an in-house system with SAP.

IT Innovation for Competitive Advantage

Michael Krigsman: I’m Michael Krigsman, industry analyst and host of CXOTalk. And I’m talking with Tayfun Yiğit, who is the Chief Information Officer of the Index Group in Turkey; and the Index Group is a large distributor of computer products in Turkey.

Michael Krigsman: Tayfun, tell us about the Index Group.

Tayfun Yiğit: Okay. The Index Group is a 27-year-old company, and the number one, one-stop IT distributor in our country. We control around 40% of the market, and have been the leader of the market since 2000, which is around 16 years now. And, we work with approximately 4,000 - 4,500 channel partners. Last year’s global revenue was around $1.2 billion annually.

Michael Krigsman: So you have a 40% market share; that’s an extraordinary number!

Tayfun Yiğit: Yes, but there’s not much room for many distributors. So, the market is mainly controlled by the distributors appointed by our vendors ─ the brand owners like Lenovo, Asus, Apple; any brand you can imagine that is currently being distributed here in Turkey. So, that’s the business model for the vendors. So what they do is they appoint several distributors, and namely, we are one of them. And thankfully, we [have been] kind of the greatest for 16 years now.

Michael Krigsman: Now, I am sure that the market and the competitive landscape has changed very significantly over this period of time, and probably especially during the last 2, 3, 4, maybe 5 years. So, tell us about that, please.

Tayfun Yiğit: Yeah, exactly. You are very much right, and the margins are getting narrower every day, and it’s becoming more and more competitive every day. The distributors are seeking ways to do new methods of business in the markets for the larger market share. They compete with each other, and also trying to adapt to the consumer needs as days go by. So naturally, we experience all these issues firsthand and we must develop new methods, and ways to adapt to issues that we come across every day.

Michael Krigsman: So what are these methods and approaches? How are you managing and addressing the changes that have hit your industry?

Tayfun Yiğit: Okay, we have several responses to these issues. The first is we are trying to invest more and more into IT, and increase the efficiency of our resources ─ mainly human resources─ because, also, our cost is human resources. And so, we are trying to do business more efficiently through the facilities of IT operations. And, the second thing is we are trying to expand to new markets in our neighbors, the former Soviet Union markets, [which are the] historically Turkish origin countries like Azerbaijan, Georgia, and Uzbekistan, and similar countries like that. And, another thing we are doing is we are trying to align better with the consumer markets through investing resources into mobile computing - mostly mobile phones, tablets, phablets, and things like that. So, we are kind of trying to diversify and proliferate our services.

Michael Krigsman: It sounds like you’re undertaking business model changes that are pretty significant as well in this mix.

Tayfun Yiğit: That’s right, that’s right. The IT issue is kind of an important and hot issue for us because we migrated to SAP on January 1st of this year, 2016. And that was a big change for us because we used to run our in-house developed ERP system. And now, thanks to the large ecosystem and infrastructure provided by SAP, we are much more agile. So, Goal #1, achieved. We are improving our efficiency through the change in our IT infrastructure this way. And, another thing is we are reorganizing and re-engineering our business processes because things have to change and adapt to all these mentioned new developments. Human resources is kind of a key element in our job. So, what we are trying to do is we are trying to choose the right people for the right job. This is another trick maybe we use to adapt to our newly emerging requirements. So, of course, the new landscapes, the new countries, the new markets are natural and it’s standard sales and marketing thing we do like every company.

Michael Krigsman: When you say that you needed to become more agile, and you’re relying on your systems to help with that, can you elaborate on what specifically you mean by that? How does it directly impact the business?

Tayfun Yiğit: Okay, that’s a very nice question. Actually, the IT business requires lots of manpower and development efforts to put a new process into use. Every day, a new requirement comes up from our vendors, from our group of companies, the management teams, the sales force, etc., and our natural business expansion actions, etc. So, we have to develop and tweak our software every day. In the old days, this took a lot of time, and after we received a new requirement, the actual Go-Live, or the actual implementation took around, let’s say, four weeks. But now, thanks to this large infrastructure and ecosystem and plumbing provided by SAP, we kind of reduced this to approximately four days, comparatively. So, it’s a magnitude faster [when we develop] our systems depending on our requirements. So that’s a very large efficiency. With the same team, we output much more productivity, and products and services, to our clients, which is the company personnel and business.

Michael Krigsman: So, your business is based around people, as you said earlier; and so, it sounds like the consolidation of systems is enabling your people to get things done much faster, which of course, that level of efficiency can change your operations.

Tayfun Yiğit: Exactly, exactly. That’s the key issue. The efficiency was the main goal for us, and trying to do much more with the same, or even maybe less resources. Of course, the margin changes ─ the margin decreases ─ kind of forced us to take such similar actions. So, that’s a main issue: If you decrease the costs somehow, or if you increase your throughput, you will adapt to the decreasing margins problem.

Michael Krigsman: And this feeds into your shifting business model as well, I’m assuming?

Tayfun Yiğit: Of course, of course. Absolutely.

Michael Krigsman: I should ask you, are you cloud or on-premise?

Tayfun Yiğit: We are mainly on-premise. We are experimenting on cloud products and services, but we still do not rely on the communications infrastructure. The Internet connectivity here ─ it’s still not fast enough to achieve local access network speeds, and similar speeds. Also, there are some legal actions that need to be taken to make sure that your data is safe; your servers are safe; and your business will not be interrupted in any way through problems of the service provider or through other legal issues, etc. So, I think the cloud still needs some time to mature enough, especially in our environment, to make us feel comfortable enough to migrate entirely to the cloud.

Michael Krigsman: So it sounds like in Turkey, for the moment, on-premise is just a more practical option.

Tayfun Yiğit: Yeah, 90% of similar people like me think this way.

Michael Krigsman: What are the changes, the upcoming changes, that you anticipate in the market that are going to force you to respond?

Tayfun Yiğit: Yeah actually, the same trend that will probably continue. So, our net, our margins are going to get narrower every day, and the mobile rush, and the mobile popularity will increase every day. So, we will have to find ways and adapt to this issue. And we actually set up a company [that groups some of our] subsidiaries {to] concentrate solely on this mobile environment ─ the consumer mobile market. And, another initiative we have taken is we have kind of merged and placed around our contracts to make sure that one of our companies focuses solely on the value-added services like server storage services, database management products like Oracle, HANA, things like that. So naturally, value-added products and services kind of have higher margins. So that helps us to fight with the ever-decreasing profit margins much better.

Michael Krigsman: So your business model continues to evolve, it sounds, quite rapidly in fact.

Tayfun Yiğit: Exactly. Our market is a very interesting market, and let me try to illustrate it with an example: I’m going to mention some names, naturally, but let’s say the brand Apple takes a specific action to increase their sales, or to reach deeper channels, etc. In a week’s time, you will immediately observe that Samsung, or LG, or Huawei kind of take a similar action. So, you have to adapt very fast, because your vendors are acting very fast. So, agility is very, very important for us. That’s why I try to concentrate on that agility issue.

Michael Krigsman: And finally, as you have been through these changes, and these evolutions responding to the market, what are some of the lessons that you have learned? It’s always hard to change, and so, what can you share with us about your experience?

Tayfun Yiğit: Okay. That’s also okay; that’s also a great question, Michael and I will, of course, kind of touch on the issue of migrating to SAP a little bit when giving you these examples, because that’s the most significant change we have performed in the last year. It was a very important step for us also. Choosing the right partners is very important in this SAP ecosystem. So, it’s not easy to come across many qualified consultants every day in every consulting company, so it’s very important to wisely choose the right consultants for the right people.

And also, what we did was we kind of tried to train our troops, our internal team of developers, actually to pull themselves up by their bootstraps. They are trained as strong consultants and business consultants of SAP, and also developers of SAP. So, what we tried to do is to balance our resources to be more efficient this way by relying less on partners. [Or] maybe relying on them [for just] critical issues, and doing most of the legwork ourselves. We are saving lots of resources, actually, the time in terms of time. Because if you go to a developer consultant [for] a development project, it would take two weeks maybe. But if you do it in-house, it will take maybe two days, [which is] much less than two weeks, absolutely. So, it’s important that we kind of trained our team to be experts on this issue. This was an important lesson we learned.

And also, we really took advantage of many great training resources provided by the SAP ecosystem: One of them being the [SAP] Learning Hub ─ the portal of self-based training provided by SAP itself. [Another of them being there are] lots of e-books and books published mainly by SAP Press, actually. We really took great advantage of those resources.

Michael Krigsman: So for you, gaining the self-reliance through education has been extremely important.

Tayfun Yiğit: Yes, that’s right. That’s right, because it’s never enough to learn a lot about the SAP ecosystem. It’s a huge system, it’s a huge universe, actually. So, you have to be training yourself every day, and every day.

Chief Digital Officer: Lessons from a Former CIO

Christian Anschuetz, Chief Digital Officer, UL
Christian Anschuetz
Chief Digital Officer
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

With the Chief Information Officer role in transition, business expectations of the CIO have also changed. In this episode, we talk with a seasoned CIO, Christian Anschuetz, who left that position to become Chief Digital Officer of Underwriters Laboratories. The discussion explores the Chief Digital Officer role and offers advice to both CIOs and their organizations.

Christian Anschuetz is the Chief Digital Officer at Underwriters Laboratories. He has been the Chief Information Officer of Underwriters Laboratories since November 2008. Mr. Anschuetz is responsible to establish IT strategies, goals and priorities and to provide senior leadership on key technology initiatives in the areas of enterprise resource planning, business process automation, computer systems validation, and electronic communications. Mr. Anschuetz served as the Chief Information Officer and Executive Vice President of Americas at Publicis Groupe SA, where he was responsible for the strategic management and delivery of IT support to over 17,000 associates in more than 100 unique lines of business. Prior to Publicis, Mr. Anschuetz served as Vice President and Director of Operations at BCom3. He began his professional career in a broad range of progressive management roles these included; Senior Consultant and Information Security Thought Leader for Sprint Paranet, and Senior Partner/Founder of UpTyme Consulting. He holds a Bachelor's Degree in Economics from the University of Michigan, Ann Arbor, and a Bachelor's Degree in Computer Information Systems from Strayer University. He was a decorated United States Marine Corps officer and a veteran of the First Gulf War.

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Chief Digital Officer: Lessons from a Former CIO

Michael Krigsman: Welcome to Episode #223 of CxOTalk. I’m Michael Krigsman, and I am your host. I’m an industry analyst, and we have a really interesting show. We are going to be talking about the role of the Chief Digital Officer, and our guest, Christian Anschuetz, works for a company called UL that everybody knows under the name “Underwriters Laboratories.” So, I have to imagine that having been founded in 1884, the company is different today than it was way back then.

Christian Anschuetz: Oh, it is so different than it was back in 1894. Hugely diversified, it is now a global leader. We're in over a hundred countries worldwide, thirteen thousand people to this day; it's a fantastic company with just a super, absolutely superb mission, which again is all about safety, safer living, [a] safer working and living environment.

Michael Krigsman: So, you were the CIO at UL for many years. And, then you transitioned recently into the Chief Digital Officer role. So, let’s begin by talking about that CIO role. So, what was your mandate as the CIO?

Christian Anschuetz: Well, I think I was just like, you know, every CIO. My job was to help create a contemporary technology, a platform if you will, that would allow the company to be successful in the marketplace.

Michael Krigsman: And, what are some of the challenges that you face? I mean, it’s a really tough job. And, I’ve seen you talk a lot about the role of IT in terms of supporting innovation at the company. So, I think that’s a particularly interesting aspect as well.

Christian Anschuetz: Well, you know, I think that everybody has a role in the space of innovation. And, I definitely think that technology, whether you’re in IT or in a line of business that’s associated with technology, you have to lead from there, because you simply are already in that cutting-edge space. And, I think we’re uniquely positioned as leaders in technology to be aware of new and emerging trends, and take advantage of them for our respective businesses.

Michael Krigsman: But, I guess, you know, the challenge that many CIOs face is bringing innovation back inside the organization, and getting out of just supplying the infrastructure, right? And, people use the buzzword “becoming a partner with the business.” So, maybe we can kind of explore what that is, and how do you go about doing that?

Christian Anschuetz: Umm, yeah. So, maybe you’ve got to bring innovation in. You know, I’m a firm believer in the idea of cross-pollination. I think that you really have to innovate by creating a […] so, you really have to spend about two-thirds of your time outside of your comfort zone, meaning outside of your industry. You learn from what others are doing and find connection points. And then, innovate through … understanding what others are doing, and bringing those into your industry, bringing those into your company. Otherwise, what you end up have to happen, Michael, is potentially having … So we see this all the time, right? It's an industry of "me too." If all you're following is the same players in your market, the same players in your industry, you're going to keep doing what the same industry is doing. And, how innovative is that? Or, is it perhaps more interesting to bring something from outside the industry altogether, and create something altogether new? Maybe, the new category takes you and your firm outside of your niche.

Michael Krigsman: That’s a very interesting point. I guess the question, then, becomes how do you do that? I mean, do you talk with startups? How do you bring external innovation ideas inside, and especially into IT in a way that will affect the broader business outside of IT?

Christian Anschuetz: So, is the question how do you do that?

Michael Krigsman: Yeah.

Christian Anschuetz: That’s, you know, that’s kind of the magic of it. Well, you know, I think so much of it comes down to a fundamental leadership conversation, right? So, first of all, you’ve got to lead by example. You have to be able to do that yourself. You have to be willing to be really uncomfortable, right? And push yourself in these new and different areas and hopefully inspire people to do the same.

When you bring these different ideas in, you have to hopefully make the connections and show that in these intersections, in these different things that you can possibly do with the business, you can maybe create an inspiring vision that [could] have people go, “Wow! This is fantastic! This is something I want to be a part of!” I guess the point of what I’m trying to make, Michael, is you can’t tell people what to do in this space, but you can inspire them to want to be innovative. You can inspire them to want to look outside their comfort zone, you can inspire them to want to look up outside […].

Michael Krigsman: And so, can you give some examples from your experience at UL of how you did this? I know it’s a leadership issue, as you were describing, but I think it’s one that many people find very difficult, or there would be more of it.

Christian Anschuetz: Uhh, yeah. I think it is very difficult, and I think; well, let’s talk first about the last part; we said that there would be more of it. You know, what’s your impression, Michael? Are most firms struggling with disrupting themselves, even though it’s obvious that all firms are going to be disrupted?

Michael Krigsman: I mean, is that a setup question? I think disrupting oneself, whether it's a … Look, as people, it's hard to disrupt and rethink how we are, what we do, how to improve ourselves, and companies are comprised of people. So, absolutely it's very difficult for most companies, and very few companies are actually disrupting themselves. I think that's really hard.

Christian Anschuetz: Yeah, well why is that, do you think?

Michael Krigsman: Hmm. The tables are turned. The interviewee becomes the interviewer. Again, I think the reason is that it’s easier to stay stuck doing what we know. So, in business terms, we have sources of revenue. And, we have processes. And, we don’t want to risk upending or disrupting those sources of revenue. So, we tend to do that which we’ve done before, which we know has worked in the past.

Christian Anschuetz: Yeah. Michael, I think you’re exactly right. And, I’d add another dimension to it, actually. And it goes back to what you were saying about businesses not wanting to disrupt the revenue streams, or disrupt their current models. I think there’s another part to it, too. Another part is that I don’t think people want to disrupt themselves. And you know, when it comes right down to it, we can talk about IT and digital and everything, and you know all day and all night, and think about it in terms of technology, but in the end, it really does come down to people. Just because it’s digital doesn’t mean we take people out of the equation. In fact, digital is actually more powerful when you consider people as part of the equation.

What the reality is, is I think that most people struggle with disrupting themselves. I mean, change is hard. I mean, you know, there's a reason we call growing pains "pains," right? Because it's hard to grow into new and different areas. And so, I think it's really important for us to tend to the wants and the needs and perspectives of the people that we're affecting when we're having these conversations in order to really help bring in these innovations into these disruptions and make them really disruptions that are opportunities as opposed to disruptions that are perceived as distractions.

Michael Krigsman: So, you're saying that the key is to engage the people who are quote-on-quote going to be disruptive or disrupted, in order to make them part of the change process.

Christian Anschuetz: Yeah. I think the key is actually to look at them as less of people that are going to be disrupted, and more people that are going to then actually become disruptors themselves. They’re going to become part of the disruption. Umm, you know, at least that’s the perspective of a firm that’s trying to disrupt itself.

Michael Krigsman: And is that what … Is UL trying to disrupt itself?

Christian Anschuetz: Yeah, of course. Well, we definitely are. We're a hundred and twenty-year-old firm that likes to think of itself as a hundred and twenty-year-old startup. And we do want to disrupt ourselves. Yeah, that’s right.

Michael Krigsman: Well, I guess for a firm … any firm that’s been in business for a hundred and twenty years has gone through many changes. And so, can you elaborate right now on what are … What is the focus of that disruption at UL?

Christian Anschuetz: Well, you know, UL is just a fantastic company. I think you have to understand a little bit about us and let's just start with the "why," again. And so, the purpose of UL is … Our mission and our purpose is to make safer, more sustainable, and more secure … Well, [a] safer, more secure, more sustainable world. It’s a mission for humanity, right? And, we've accomplished that mission in the past by helping organizations test products to meet standards. Standards are … sometimes we write, and sometimes there are standards where we help participate in their development. And when a product passes the standard, that means that product is safe, it's sustainable, it is whatever … It's over the threshold for whatever reason that standard exists. And in many cases in our tradition business, that's about safety, right?

And yet, the thing that’s fascinating about us is that our mission is something other than testing. Our mission is about safety, sustainability, and security. And, nowhere in that mission statement does it say we just test. And, it’s very interesting, because the one thing that this company has, and that is very unique, and so we are a leader in the trust industry. We are trusted, we’re a third party, we’re hugely independent. Our integrity we hold incredibly dear.

And then, a firm's that know of us, and this is so many of them. Over seventy thousand manufacturers worldwide. That's our customer base. And, they know this about us. And, when we have the opportunity to engage in dialogue with them and say, "You know, what are the real, deep problems that you're trying to solve?" It often is bigger than simply testing their products out and help them get to market. There are way bigger opportunities for us to perhaps pursue. And, we're disrupting ourselves by thinking about ourselves in pursuing these higher order problems, as opposed to just the transactional testing activities that we do.

We’re a leader in science research. We spend more on r&d, at least to our knowledge, than anybody else in our industry. And, we are constantly figuring out and learning about these new and emerging technologies and all the while figuring out how we can maybe disrupt the status-quo as we learn more about everything from, you know, new and emerging alternative power sources, EV, hack for that case drones, new app trays and forays in cybersecurity. I mean, what makes the world safe today is very, very different than what made the world safe in the past.

Michael Krigsman: That’s quite interesting. So, your underlying mission remains constant: safety, security, sustainability; that trust that you were talking about. Your underlying mission remains constant. However, the way that you, can we say, deliver that mission; that’s the thing that changes and is disruptive. Is that an accurate way of saying it?

Christian Anschuetz: That’s wholly accurate. And, you know, that’s what’s beautiful about our mission, Michael. If you think about our mission, it’s really not bound by a lot, right? I mean, making the world safer, more sustainable, and more secure, that gives us a lot of room to maneuver, right? And in that maneuvering, it’s helpful [sic] we can maybe reinvent ourselves.

Michael Krigsman: Yeah. That's a very interesting way to think about it. I think many companies don't have that sense of constancy or consistency about their core mission. And so, the disruption becomes a more complete type of change. But, it sounds … But, so you have that constant mission and when you, therefore, are thinking about disruption, the execution, the delivery of that mission, how do you then go about it? How do you then think about that transition, that transformation?

Christian Anschuetz: That’s a big question. So …

Michael Krigsman: Yeah. It’s tough. These are tough questions.

Christian Anschuetz: Yeah, they’re really tough in that, you know … It depends on what we are … Let’s just speak in the abstract; let’s talk about any firm. It depends on, I think, what the firm’s trying to transition or transform itself into, right? And, I think that is, you know … I’m a big believer in “Start with why.” Our “why” is clear. Again, our “why” is a mission for humanity, you know. What we do then, and how we do it, is sort of that order. So you start with “why,” you go to “what are we trying to do,” and then we determine about how exactly we do that. So, it kind of depends on the “what” a firm is trying to disrupt themselves, and transform themselves into before you can probably, at least before I could […], perhaps say how you might go about doing it.

But, I want to circle back to a previous comment and part of our discussion beforehand. You know, so much of this has to do with, again, people, right? We have to be absolutely deliberate and focused on making sure we bring people along for the ride. It’s so, so critical, Michael. And, I will tell you: if you were to ask me some of the differences between like a traditional CIO or maybe a CDO role, they’re both important roles and certainly, one is not better than the other. They’re just different, right?

I think that CIO role is really more typically, typically more about internal, you know, transformation, efficiency; can be in a contemporary firm, internally. A CDO role has, you know, has to trust that a lot of that is happening internally and then project it externally, and bring the customers in. So I think the CDO role is typically, typically more of an externally-facing role. But regardless, when we are affecting like the transformation either within your firm, or you’re trying to create new values outside the firm, you really need to be considering people all along the way.

With regards to the CDO, because it may have a tendency to have an external impact which we change the internal dynamics and how the company sees itself, maybe even how – definitely how it runs itself, right? How it actually delivers this new value, start these new things.

The scope of the responsibilities tend bigger, right? So, one is internal, and one is maybe more external, at least in this definition, right? And, but the CDO role is really all-encompassing, at least in my opinion. And, you know, this is where the soft skills become even more important […] because you really are responsible for changing the external perspective on […], and then you have to change the internal perspective, perhaps, on exactly what the firm does to the value that it creates.

And so, again, I’ll go back to what I think the CDO role [is], and you actually manage transformations really involve people and organizational change management. It’s that saying – I’m stealing it from a contemporary of mine that said that, you know, “The hard results you get are really coming from the soft skills.” And I do believe that’s true for the CDO role. Both roles. All these leadership roles, for sure, but definitely the CDO role.

Michael Krigsman: So, in practical terms, how is your role; how is your work as Chief Digital Officer different from what you did and what you focused on as Chief Information Officer?

Christian Anschuetz: Well, it kind of follows that same path that I was just on. I mean, the CIO role is really much more internally focused around internal operations, and the CDO role is much more of a customer-facing, customer-discovery, customer-exploration role. Again, going in front of customers and saying, “Okay.” You know, what are the really big problems that you’re trying to solve? And doing this out of the context of how they normally see you as the firm. Remember, relationships are contextual, right? So if you and I only know each other in a certain context, and we keep talking about the opportunities to work together in new and different ways, it will always be influenced by the context in which we know each other. Is that a fair thing to say?

Michael Krigsman: Yes, of course.

Christian Anschuetz: Well, when you want to go into these customers, and you want to discover these bigger opportunities, you have to first pull yourself out of that context that you’re known for, and probably talk to someone that’s different from that customer, it doesn’t have that same context. I mean, the day-to-day context of how they do business with us today.

Now, this is why, you know, for the company now, I’ve been speaking in generalities, the company that I’m with now, UL, [has been] talking about … With the permissions that we have in terms of this leader and the trust industry, and this independence, high-integrity firm, we have the opportunity and the latitude, in so many cases, to move outside of typical interactions we have with our customers and engage in different ways; simply because we carry those traits with us. We’re the […]. And so, then we can engage in a different conversation and start having explorations around different, perhaps even bigger problems that we can solve for them. And, again, perfectly in conjunction and support of our mission and our purpose.

Michael Krigsman: So, when you talk about, again, going back to this consistency of mission and purpose, to what extent is this change and disruption affecting your underlying business model and the operations of UL?

Christian Anschuetz: Well, I think that has yet to be seen, Michael. I mean, we’re a relatively – I’m relatively new into this role, and you know, that said, the company has been working to improve itself and diversify itself in accordance with our customer needs for a long period of time. We had a very big disruption for any firm. You know, I sometimes wonder, I mean: When GE was, you know … decided to go to GE digital and really kind of create this industrial internet, this Predix platform and all that, when did they know that’s what they’re going to do?

Michael Krigsman: Yeah, what an interesting question. I mean, I think to … We’ve had a few people from GE on this show. We’ve had Ganesh Bell, who is the Chief Digital Officer for GE Power and Water – they have a different name, I think. And we had Linda Boff, who is GE’s Chief Marketing Officer. And, I think it became apparent to them that the market was changing, and GE needed to have a different kind of relationship with their customers. And so, they then re-thought, “Okay, what kind of technology platforms are they using? What is their business model? How are they selling? How are they pricing?”

And so, for example, instead of selling you a jet engine, they’ll … They own the jet engine, and they’re essentially licensing that jet engine to you, and you can pay on the basis of usage, obviously.

Christian Anschuetz: Jet engines, who would have thought. Right?

Michael Krigsman: Exactly. So, the question of how do you recognize when it’s time to change. I mean, at UL … And I want to remind everybody that we’re talking with Christian Anschuetz, who is the Chief Digital Officer of UL. And, I think everybody knows UL by the name “Underwriter Laboratories,” which was their original name before rebranding. And so, how do you, at UL, […] recognize, and when did you, and what are the signs that say, “Hey, we need to do something different?” It’s a really tough; it’s a really interesting question.

Christan Anschuetz: Yeah, and it's a tough question. I'm not sure if I can put exactly my finger on it and give your audience, your esteemed audience a really great answer. We do know that there is a need for us … our entire industry knows that we're in a position where we can be potentially disruptive, right? And the question is without knowing exactly what that disruption will be, there is a very simple question, and it's one that hopefully all companies, and all leaders are asking themselves: "Do we want to be the disruptor of ourselves, or do we want to sit by, sit back, and wait until someone disrupts us and then moves the initiative?" And, I think we … You know, UL I can speak for specifically, in this case, we want to keep that initiative. Now, why give up that initiative when we can own it?

Now, exactly what that disruption’s going to look like, exactly what will happen; we aren’t sure. Yet, we do know that the only way we’re going to seize the initiative is to act and to do something. And something is? Michael, hopefully someday we’ll talk and we’ll go, “Wow! That was crazy a year ago or two years ago.” Whatever it was. “How did you know you were going to get here,” and you know, we’ll probably reflect back and say, “Well actually, we didn’t, and here are the series of milestones we get,” and then suddenly, “This is the epiphany was this is what we’re going to do and this is how we’re going to change,” and create and entirely new category of business. Something out of what is our traditional industry which is TIC, testing, inspection, and certification.

Michael Krigsman: Well, it’s definitely not a straight line.

We have a few questions from Twitter. So, let's jump on those because they're pretty interesting. So …

Christian Anschuetz: To the best of my ability.

Michael Krigsman: To begin, Arsalan Khan asks, “It sounds like, to some extent, the CDO role is like a consultant to external clients.” I’m sure it’s not a consulting role, but in fact, there’s probably an element of that.

Christian Anschuetz: It’s actually a really great comment. And I think, you know, maybe I would have been pretty far from using the word “consultant,” just the way I think of that word sometimes. Umm, I do think there’s something to that statement, though, because one of the things we have to do that goes back to the whole context thing – I think one of the things we have to do when we’re talking to our customers, when we’re really thinking about the businesses we want to be in and the problems, the key, the problems we want to solve; we can recursively ask “why,” right? Keep asking, “Why are you doing this? Why are you having this problem?” I know “why” is a personal word. You know, “What makes this an issue for you,” until you finally get to, you know, the root cause; you know, the root problems that, you know, the company’s real customer base is experiencing.

You know, our perspective. They engage us for many, many different things. UL's a hugely diversified company and very different than it was a number of years ago. The core of our business is still we test the product against standards and when they pass, we help issue a mark, we tell the agency we're testing for that it met the performance criteria, whatever, right? But when you start asking, "Why do you need the tests," and "What makes you require this certification," until you keep asking for […] It's the organization's turn to try understanding that there's just a general lack of understanding with regards to firms of what they have to do to really, to safely, in accordance with compliance and regulations, put their products in a specific market, right? And testing is a byproduct. That comes down to the “how” you actually do it.

But, you could wind back and keep asking why until you get to the whole … a totally different problem statement that if you attack the “there” or the “why,” then what would you do today could be, you know, it could be relevant; it could be relevant in a different way. I suppose it could be rendered […] and I think that’s unlikely in this particular scenario. But, I think there are the things we can resolve, but you have to …

The consulting question is good, because you have to go in there, and you have to do essentially customer discovery sessions. What are the real pain-points? Other than the context that they know you and that you know them?

Michael Krigsman: And, Arsalan Khan has a very interesting follow-up to the point that you were just making. And he says, “So, yes, it’s good to know… We have to know customer pains and their concerns, and so forth. But, if we only listen to our customers, then Ford would have made just faster horses, not cars.”

Christian Anschuetz: Well, that comes down to the whole design theory, right? You can go and you can listen to just what they say and that’s the Ford story, you know, “Instead of building a car, would they have built a faster horse?” But, what the customer’s really saying when you recursively ask “why” enough is that they actually needed to get from point A to point B faster. They had to do it without a certain amount of maintenance. They didn’t like using; I’m totally making this up [laughter]; they didn’t want to wagons, they needed something with a certain amount of capacity. They didn’t want to sit side-by-side with somebody. In other words, the question might have been more about, or the challenge might have been more about diversity in mobility than it would have been about a faster horse. And if you listened enough, you might have heard something different than a faster horse, too.

I totally get where that statement’s coming from now. I mean, I get it, and I believe in that. But, I think when you listen to them, you have to listen to what they say, you have to really understand what they mean. Those can be two different things.

Michael Krigsman: That’s a key point. So, it’s not just listening to the words, but it’s trying to divine being empathetic, I guess you could say; being empathetic to what do they really want? Listening recursively, as you were describing earlier?

Christian Anschuetz: Yeah. What do they want, and what do they really need? And if you look at some of the best disruptions, I mean, you’re talking about things that people didn’t even know that they wanted. I love the example of Uber. I know it’s kind of tired in so many ways, but just think about it. People just always took for granted that you had to stand sort of dangerously close to the curb and wave your hand waiting for a cab, and by God, hopefully, it wasn’t rush hour, or it wasn’t raining, you know? Or otherwise, you were kind of out of luck. And that, though, was just the way it was, right? Of course that’s just the way it is, it’s how the business works, that’s how … We got rides from Point A to Point B until someone said, “Wow! You know, there’s another need there.”

And actually, did they have to ask the customers or did they just have to observe? And, I think that's observation is key, and that kind of goes to that second thing. You can listen to what they say, but you've got to really follow the meaning. And, the meaning can be divined by any number of different ways, but observation is certainly one of them. I think it's probably the key one.

 Remember, most of what we get from people is less about the words they say, it’s about how they say ‘em, right? It’s the nonverbal cues. And then just if you believe that, right? […] And there’s all the science to back that, that makes it very clear. If you back that, and you really kind of add, then, the sort of subtle, nuanced, observation piece and you say you observe their behavior, well that’s when you get into design thinking and you start understanding why some companies are just better at disrupting than others. They do more than just listen to words.

Michael Krigsman: It’s quite interesting: design thinking as a systematic means to do that kind of deep listening that you’re describing in order to get to the surface of what the customer ultimately really cares about.

Christian Anschuetz: Yes.

Michael Krigsman: We have another interesting question from Twitter. Marc Orelen asks a burning question that I think is on all of our minds, which is: Why do we need a Chief Digital Officer? Why are these … Why is the CIO and CDO role separate? And he says, “wouldn’t the ideal be a customer-focused CIO?”

Christian Anschuetz: I think that’s a great question and a great point. So, you know, it’s so funny. I got the CDO role just a short while ago. I’ve been operating in the capacity for a while as the CDO. But, I’m still the CIO. So, what’s the difference, right? No sooner than I got the role that I stumbled on an article by Forbes. It was January … It was this year, I think, in January. Forbes was saying, “Say goodbye to the CDO role.” And I read it, and I’m like, “Wow. That stinks. I just got the job.” [Laughter]

But the point of it was, and it was a really good point, is that if firms stop thinking about there being business strategy and digital strategy, and it’s just a contemporary strategy and the businesses are run with a very contemporary mindset, and it’s very agile around technology; it’s very inclusive of people and their involvement in technology, then you don’t need a CDO.

Michael Krigsman: So, I’ve heard people say that eventually, the CDO role may go away as the digital mindset, the digital understanding, kind of defuse through an organization; that the CDO role, we could say, is a transitionary role.

Christian Anschuetz: I think that’s right, you know? And I’m less than, I’d say, some sort of expert in this. I do think that’s right, though. But, let’s be honest with ourselves, and look about at the firms that we all know. And I’m speaking in general here. I think that having a CDO role in a company like; I’m just picking an example; like a Google, for example, probably makes a little less sense than a company like, say, maybe like a Ford Motor company, right? Both fantastic companies; and by the way, I drive Fords; love Fords.

But, you know, I think that there is this transition, as you said, and as firms … Firms don’t just overnight become this sort of digital entity, right? It took Ford a while to understand that they didn’t just do cars; that they did mobility. And then understanding what it takes to be mobile players in the digital world is still something that they’re embarking on. And so, having a CDO role that is sort of ushering in that understanding, this sort of contemporary culture, this contemporary understanding, this contemporary application to their business I think takes a certain amount of time.

So, counter to the Forbes article, which said "Say goodbye to the CDO role," was another article by McKinsey that talked about the CDO as a transformer-in-chief. And, you know, I prefer the latter article to the former. By the way, they're both great articles. But I think that's why you actually need the CDO role, at least right now, because I think we're in a state of massive transformation. And again, every industry is going to get disrupted and since we're all rather unclear as to how we do it; I mean, the very basis of why we're having this conversation, the questions you're asking. How are you going to know? How are you disrupting yourself? What are you doing about it? Because most of these questions are very difficult to answer for most firms. I think that's why the CDO role exists.

Michael Krigsman: Well, as you said earlier, it’s very difficult to disrupt ourselves as individuals, and it’s very difficult to make the changes needed to disrupt ourselves as companies.

We have another really interesting and, I think a pretty deep question, actually, from Sal Rasa, who says, “Is the CDO role a community relationship responsibility, a community relationship management responsibility, designed to inform change management decisions?”

Christian Anschuetz: I think that’s a big part of it. I really do. I go back to the statement about the people, and not leaving the people behind. That is all about change management, and I think that that is a really big part of it. Now, that said, there is an external portion of it that goes back to these adjacencies that we talked about. You have to be bringing the people on, but you also have to be an explorer, and you have to be utterly unafraid to go into new and different areas.

Jeff Bezos, I love one of his quotes, and he’s a very quotable person, right? He made a comment that’s a quote, and I think I’m attributing this properly. If I’m wrong, I apologize, but he said that “At Amazon, we're not afraid to be misunderstood." And, I think what's behind that quote is that they are okay to go in new and different areas, and have a lot of people scratch their head and go, "Why the heck are they doing that?" But they're doing it as part of their exploration. Now Louis and Clark didn't make a beeline directly from the east to the west. It wasn't a perfectly straight line and we made that comment earlier, right? You know, a lot of people that I'd say, "Well why did they scale that mountain?" Well they actually didn't know they had a choice, or it looked particularly great, or perhaps, it gave a whole new vantage and a whole set of opportunities that lay beyond it.

I think that there’s people aspect to the CDO role, I think that’s critical, I think this exploration portion of it, and bringing the people along in that exploration; again, making them potential disruptors themselves is actually very, very critical.

Michael Krigsman: […]

Christian Anschuetz: And yet again, another really [good point], you do have … I remember when we were starting this conversation, you said that "Christian, just think we're going to be sitting here talking around a table with a bunch of very, very smart people." You're making that comment, and clearly, the audience and the questions they're asking is making your statement very, very true.

Michael Krigsman: Oh yeah. Now the audience of CxOTalk is quite amazing.

Now we have another really interesting comment from Shelly Lucas, who is with Dun and Bradstreet. And, she makes the comment that she thinks you are ahead of your time as a Chief Digital Officer because many digital leaders are focusing on the science rather than the people on the culture. And I interpret that to mean not just the science, but focusing on the technology platforms that enable this, as opposed to the people in cultural issues.

Christian Anschuetz: Well, thank you. You said it was Shelly?

Michael Krigsman: Shelly.

Christian Anschuetz: Well, thank you, Shelly. That's very kind. You know, I was in IT long enough to know, I mean, IT could implement the best system, and you fail to get the people on board with it, and you're going to have an adoption issue, you're going to have, well, we all know the stories, right? You can implement the best system and … By the way, a little IT joke: How do you make people love their old system? Implement a new one, right? And that’s because if you fail to bring [Laughter]… It’s true! It’s so true. It’s a joke, but it’s totally true.

Michael Krigsman: [Laughter]

Christian Anschuetz: Ummm.

Michael Krigsman: Spoken by somebody with a long history in IT. I’m sorry, I didn’t mean to interrupt. Please, go ahead.

Christian Anschuetz: But it’s totally true, and you know, so I learned at a relatively young age, and I’ve been trying to get better at it, and it is a bit of a struggle. But I’ve learned that you can only get down the path as far as you want to go when you have a lot of people in support. So, you’ve got to bring them along. And I go back to this topic of leadership at the end, but what is the obligation of leaders but to create a compelling vision and inspire people to fulfill that vision? And if you are unable to do that, then how would you ever really help to disrupt yourself and disrupt an entire industry? Because you're not going to disrupt it with just technology. You're only going to disrupt it with your people plus some technology.

Michael Krigsman: So the technol- … I mean, the way I talk about it often is the technology provides enabling capabilities, right? It lets you do things that you couldn’t have done before. So, for example, a software platform that lets you collect data. Well, you need, if you’re a digital company, you’re going to be relying on lots of data. Merely having that technology platform doesn’t mean that anybody is going to use it or do anything valuable with it.

Christian Anschuetz: You’re a wise man. That’s exactly right. How many great technologies were just simply the wrong technologies even though they were perfect, but they came out too soon. They came out too soon, so they were still wrong, right? And so, you know, was it because the technology was at fault? Was it because society or the audience was unready for it, or was it a combination of the two where the technology was right for too little time spent in making the audience understand why this was actually, you know, a really great value. I think there are probably a bunch of different answers depending on use-case to look at.

Michael Krigsman: So, how do you convince the organization that change that it needs to undertake; this kind of change; and then, can we go back to UL specifically and talk about the nature of this change process at UL?

Christian Anschuetz: Uhhh, sure. So, what’s the question you kind of want me to dial in on there? Is it change process specifically you want?

Michael Krigsman: Well, I think the … And by the way, we have about five minutes left, so as we wind down, what are the lessons or the takeaways about driving disruption; self-disruption; disrupting your own organization? How do you even begin?

Christian Anschuetz: Well, Michael, I think you begin and you might be surprised to hear this from a company that prides itself in integrity and independence. It starts with transparency. You know, we ask our colleagues and they’re getting better at this, and we’re just really kind of starting off. Our colleagues, you know, what are the directions that they think we should go? What is the company that we can, and we should be? Again, unconstrained by anything other than our unique mission and purpose; again, […] for living and working environments, right? And our imagination. What could this company be? Getting them involved. I’ll tell you that’s what I think is one of the most key things I can do. Again, I know it’s soft, it has very little to do with inventing some whiz-bang, high-tech solution, but it’s been an important lesson for us, I think, is to involve our staff.

I think the other thing is, again, that thing we talked about already which is changing the context of our conversations with our customers. They know us in a certain context, they give us permissions to have different conversations with them than we traditionally do, so seizing those permissions, having a different power station, and really try and find the sort of root of desire, or the problems that plague them. And, that you have the opportunity to help them address and create new value for them and that portion of the company […]

Michael Krigsman: What about the role of senior management? You know, you’re talking about the grassroots side, but don’t you have to also go from the top down as well?

Christian Anschuetz: Well, you know, again, the senior management, that leadership, it's the vision, it's inspiring people to follow that, and then, of course, there's modeling, right? There's an old … You know, I was in the Marine Corps, and the Corps taught you a lot about leadership and this concept of leading by example. And allowing yourself to be less than perfect; allowing yourself to fail and even celebrating this failure, so getting a management team on board is saying, "Hey, we're going to explore," and some of our exploration – perhaps even the majority of our explorations – are going to end in dead ends. Being accepting of that I think is critical, because that unfetters your organization. It makes them less scared to move in those areas with these roads less traveled, and become potential disruptors themselves. Because, if you're afraid that a dead-end is going to be a blemish on your career, on your history, I think that you're actually stifling yourself. I think you have to free up, again, you have to free up your people, and to the best of your ability, just free them up from that particular fear, and help them have courage. Well, there will be some fear, but a little less fear, a little more courage, and I think senior management's critical.

Michael Krigsman: Well, I guess that’s a … one of the most important and fundamental lessons. We have just a minute left, and Christian, I know that you are a vet, and I know that you’re very supportive of vets, and would you like to take a minute and tell us about some of your activities in relation to that?

Christian Anschuetz: Aww, thank you. Thanks, Michael. Yeah, I mean, just a quick plug. I'm part of an organization called Project RELO. It's a fascinating organization that uses transitioning veteran instructors to teach corporate executives the art and science of leadership. And, that's done in a very unique fashion. In partnership with the United States military, we do pseud-military operations with this collective of executives and veterans and build a deep understanding that hiring our veterans is more than a social good, it's simply good business. If you want to learn more, check out projectrelo.org.

Michael Krigsman: Project reload, r – e – l – o – a – d-dot org.

Christian Anschuetz: Uhh, Project r – e – l – o-dot org. RELO.

Michael Krigsman: Got it! Okay! Check out projectrelo.org.

We have been talking with Christian Anschuetz, who is the former Chief Information Officer and now the Chief Digital Officer of UL, which everybody knows as Underwriter Laboratories. Christian, thank you for taking the time to be here with us today.

Christian Anschuetz: Thank you so much.

Michael Krigsman: We have more shows coming up, and they are great shows. Next week, we’re speaking with the CEO of Coursera, and he used to be the president of Yale University, so that’s going to be an interesting one. Check out cxotalk.com/episodes. Thanks everybody for watching, and we will see you next time. Bye-bye!

AI: Legal, Ethical, and Policy Challenges

Dr. David A. Bray, Chief Information Officer, Federal Communications Commission
Dr. David Bray
Federal Communications Commission
Kay Firth-Butterfield, Executive Director, AL-Austin
Kay Firth-Butterfield
Co-Founder, Consortium for Law and Ethics of Artificial Intelligence and Robotics
University of Texas, Austin
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

Artificial intelligence is fraught with legal, ethical, and public policy challenges. This episode brings two esteemed experts to discuss these issues and present guidance for both commercial companies and the public sector policymakers.

Dr. David A. Bray began work in public service at age 15, later serving in the private sector before returning as IT Chief for the CDC’s Bioterrorism Preparedness and Response Program during 9/11; volunteering to deploy to Afghanistan to “think differently” on military and humanitarian issues; and serving as a Senior Executive advocating for increased information interoperability, cybersecurity, and civil liberty protections. He serves as a Visiting Executive In-Residence at Harvard University, a member of the Council on Foreign Relations, and a Visiting Associate at the University of Oxford. He has received both the Arthur S, Flemming Award and Roger W. Jones Award for Executive Leadership. In 2015, he was chosen to be an Eisenhower Fellow to Taiwan and Australia and in 2016, Business Insider named him one of the top “24 Americans Who Are Changing the World”. 

Kay Firth-Butterfield is a Barrister and part-time Judge and has worked as a mediator, arbitrator, business owner and professor in the United Kingdom. In the United States, she is Chief Officer, and member, of the Lucid.ai Ethics Advisory Panel (EAP) and an adjunct Professor of Law. Kay is a humanitarian with a strong sense of social justice and has advanced degrees in Law and International Relations. Kay co-founded the Consortium for Law and Policy of Artificial Intelligence and Robotics at the University of Texas and taught its first course: Artificial Intelligence and Emerging Technologies: Law and Policy. She is Vice Chair of the IEEE Industry Connections Committee “Global Initiative for Ethical Considerations in the Design of Autonomous Systems”. 

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AI: Legal, Ethical, and Policy Challenges

Michael Krigsman: Welcome to Episode #203 of CXOTalk. I’m Michael Krigsman, and CXOTalk brings together the most innovate, most original, most interesting business thinkers to have an in-depth conversation about important and very often disruptive issues. And these are people who are genuinely shaping some important part of our world. Today, on Episode #203 of CXOTalk, we’re going to be discussing artificial intelligence, and particularly the ethical and the public policy, and the legal challenges and implications associated with that. We have two amazing guests. Our first guest is Kay Firth-Butterfield, who is a legal scholar and one of the world’s top experts in the ethical issues and legal issues associated with artificial intelligence and robotics. And our other guest is David Bray, who is the CIO for the Federal Communications Commission. So, let’s begin with Kay. Kay Firth-Butterfield, how are you and thanks so much for taking the time!

Kay Firth-Butterfield: Thank you for giving me the opportunity!

Michael Krigsman: So Kay, tell us about your background.

Kay Firth-Butterfield: Well, my background, as you say, I’m a lawyer. I was a barrister and judge in England before I moved to the United States about eight years ago. And here I’ve been teaching law, and thinking about artificial intelligence. I recently was the chief officer of an AI company and ran the ethics advisory panel. We were the first AI company that actually allowed its CO to go out and give talks, and talk about what we were doing. I’d say that was a great privilege for me to be there at the founding edge of that work and to be able to talk about what we were doing. In the last month, I moved to be the executive director of Austin…  AI-Austin and that’s a brand new collaboration between academia, industry, government, medical school, and others. And although we’re based in Austin, we’re actually having a very global outreach program. So, I’m really looking forward to taking that forward with my co-founding advocates. I still do have an academic background: I’m Distinguished Scholar at the [Robert E.] Strauss Center at the University of Texas; and I teach a course on artificial intelligence and the law for the law school there. I am founder of an organization that is a consortium at the University of Texas, which, we call it “CLEAR” because it’s actual title is quite long. It’s the Consortium on Law and Ethics of Artificial Intelligence and Robotics. And, then, I am Vice Chair of the IEEE’s project (another snappy title): The Global Initiative for Ethical Considerations in the Design of Autonomous Systems.

Michael Krigsman: Ok. So, if we want to talk about law and AI, you’re the person to talk to. [Laughter]

Kay Firth-Butterfield: Well, I’ll try to be! [Laughter]

Michael Krigsman: Ok. And, our other guest is my good friend and colleague David Bray, who has been on CXOTalk several other times, and David is the CIO for the Federal Communications Commission. Dr. David Bray, welcome to CXOTalk again!

David Bray: Thanks for having me, Michael. It’s great to be here and I look forward to discussing how we can both deal with the basic fundamentals of artificial intelligence; and how we can begin to use it in organizations both public and private; as well as how we can actually make sense of the ethical issues involved in AI use.

Michael Krigsman: Ok. So let’s dive in. When we talk about AI, what do we mean? David, tell us, what are we actually talking about here? I think we need to get that out of the way first.

David Bray: I think that’s absolutely true. So, artificial intelligence probably includes many different things to different people. And I can only talk about it as machine learning; it’s neural networks… It really is using technology to try and emulate, basically something that appears to be intelligent. And I want to be very careful about using the word, “appears to be intelligent” because we have to answer the question of what’s intelligent behavior in the first place. We can be very human-centric and say, “Well, humans are inteligent because we are able to make sense of challenges put before us. We can be goal-oriented.”

I think when it comes to talking about AI, what we’re really talking about is using technology to solve problems or achieve goals in ways that appear to mirror intelligence beyond just something that someone has programmed the machine explicitly to do.

Michael Krigsman: And Kay, as an attorney, how do you think about the definition of AI?

Kay Firth-Butterfield: Well, I will piggy-back on what David said, in terms of AI. But, I think that basically we’re talking about a scholarship that has been going on now for a long time and a number of different ways of achieving what we call “artificial intelligence.” But again, I’m going to piggy-back on David as to what might be intelligence. I think that we need to perhaps lift from the UK government’s recent report that “artificial intelligence” can be adequately used as an umbrella for all the different things going on ─ all the different scholarship in this space.

Michael Krigsman: When we talk about AI, it seems like it has become the explosive growth in the jargon value of AI. And, in commercial companies wanting to piggy-back on top of the terminology. And so, clearly AI is very important, but can either of you shed a little bit of light more specifically on why it’s so important, why this explosive growth, and why we should actually care about the legal, policy, ethical issues of AI?

David Bray: So … Go ahead, you can go first, Kay.

Michael Krigsman: Please, Kay, go ahead.

Kay Firth-Butterfield: Ok. [Laughter] I think that one of the things that sticks out in my mind is some research that McKinsey [&Co.] did recently, where they describe AI as a contributing factor to the transformation of society. And I just want to quote what they’re saying about the transformation of our society: that it’s happening ten times faster, and at three hundred times the scale, or roughly three thousand times faster than the impact of the industrial revolution. And you know, a lot of people compare this revolution to the industrial revolution. But, I think it’s the speed and the real, core underpinning that AI is contributing to that transformation of our society, that makes these discussions so important.

David Bray: So, I would build on what Kay was saying, and really say that I think AI has had three waves. We’re kind of in wave three in my opinion. The first wave: you can actually go back to a Nobel Prize winner Herb [A.] Simon. Herbert Simon, interestingly enough, actually started off actually with New York government and public service, and he observed what he called administrative behavior. And what he saw in terms of how people did administrative behavior was, generally, people didn’t go beyond sort of the landscape of what they already knew to be true. And he had this conclusion that the challenge is “How can you help people in organizations go beyond the landscape of what people knew to be true.” And interestingly enough it led him to do behavioral economics, behavioral psychology, and eventually to artificial intelligence. So, in some respects, observing how people make decisions in public service gave rise to artificial intelligence. That was a first wave.

The later waves tried to look at what was called decision support systems, expert systems and that would be the late 80’s and the 90’s. And I think what we’re now is, I think the third wave is really occurring, quite frankly as Kay said, because computers have gotten fast enough; memory has gotten cheap enough; the internet is now connecting things that we can actually now do distributed problem-solving at a scale that frankly was not possible in the 80’s or 90’s, or when Herb Simon was trying to do his work in the 70’s.

So, why AI has become the buzzword is, in some respects, and I would say it’s replaced “cloud” as the new buzzword. In some respects, cloud was the buzzword four or five years ago. That said, and interesting enough, even though it’s replaced that buzzword, in some respects AI is only possible now because we do have cloud computing. So, you have elasticity of CPU cycles, of memory, and quite frankly, just the sheer scope of being able to collect data and trying to make sense of it. That’s why I think artificial intelligence has reached the crescendo that we’re hearing about right now.

Kay Firth-Butterfield: And I think also that we’re actually beginning to see artificial intelligence so the general public can see it so much more. And they’ve interestingly, the Future of Advocacy did a YouGov poll in the United Kingdom just recently, which showed how little the general public understand about AI. But, when they go out their door, and they can see for example an autonomous vehicle or truck, then that’s really leading to the way that we’ve had much more reporting in the press about AI. And so, I think it’s not just the technology, but it’s also the fruits of the technology that are being seen that contribute to the conversation I think is so important at the moment.

Michael Krigsman: So we see, as you said, we see technology such as autonomous vehicles coming out, and if you’re in San Francisco you can often see these driverless cars, or autonomous cars driving around the streets, and things like Chatbots that are visceral reminders to people, or make people aware of the personal impact of these technologies. So, it’s not just hidden behind the surface. But all of this creates a set of dynamics with profound implications for ethics, for the legal system and for policymakers. And, Kay, why? Why is that the case?

Kay Firth-Butterfield: Because, we are, as lawyers, always catching up. And so, for example, in a common law system, unless you have legislation, you have to wait for something to happen before you can have case law decisions be made about it. So, we’re sort of in this holding pattern at the moment where we’re either waiting for governments to create legislation or for self-regulation to spin out, and I think that’s vitally important, or the case law piece. And so, you know, if you look at Europe for example, they have gone with regulation of a lot of these things, and more and more so. Whereas of course, in the United States, we have seen a very slow progress just through the NHTSA trying to work out how to govern or regulate safety on those vehicles.

Michael Krigsman: And David, what about … Why is this such a potential quagmire? Why is this so fraught with difficulty and challenge from a policy perspective?

David Bray: So, that is where I’ll put on my Eisenhower Fellow hat, where I was in Taiwan and Australia and had a chance last February and March talk to them, both about their strategies for the Intenet of Everything, but also the expected impacts of artificial intelligence. And I think, first is there is the need for educating the people in a way that is accessible to everyone, not just computer scientists, as to what artificial intelligence can and cannot do. I think we may have the challenge of people who have been educated in those respects through the movies and the movies, of course, show a very non-realistic situation in terms of artificial intelligence deciding to change its ultimate goal, and somehow taking over the world or something that… You know, we actually do not currently have a programming language that allows you to have the program itself change its ultimate goal. It may be able to change sub-goals, but we don’t have the ability to have a machine change its ultimate goal yet. And people will say, “Yeah,” but then unlikely again.

It’s trying to have a conversation that involves everyone, not just the experts on artificial intelligence, that is going to make tackling these issues, both in the public sector and in the private sector, challenging. And I think as Kay said too, I think we need to have a little bit more demonstration projects before there is any rush to try and do any policy. You don’t even begin to show what’s possible, both from a good sense, and also what maybe you want to try and avoid, if you don’t show what’s possible. It’s really hard to have an informed conversation. So hopefully over the next year or two, we can try to show what artificial intelligence beyond these autonomous cars, maybe can make local communities healthier or safer, maybe address things at the national level.

One of the things I’m tracking with interest is in California. They actually are using machine learning to actually help set bail decisions. So you feed in the facts of the case, and it actually makes a bail recommendation. The interesting thing about that is [it] actually helps weed out things that shouldn’t relate to your bail decision, and shouldn’t be related to your height, or your weight, or your gender, or your race. So, in some respects, artificial intelligence in that sense could actually make things more ethical, because we know what the algorithm is, and we know it’s not taking in extraneous information that should not be important.

Kay Firth-Butterfield: Except, looking at that on a different footing of helping the sentencing, you know there was the recent research done around bias ─ in-built bias ─  in sentencing so that people of color were still getting heavier sentences than white people using the models. So I think we have to be very careful around how we build these systems.

David Bray: Oh I agree 100% and that’s where one of the things I really want to see happen is making the algorithm open-source in terms of what weight and what factors it’s considering. So I agree. If you’re only going to base it on past decisions, and past decisions were made by human bias, then don’t be surprised the machine itself is going to be biased, too. I think that’s where there needs to be a conversation about where do you want to get your data. Because if your data is biased, it will result in biased decisions. However, that’s also where the machine itself can probably pick up, and actually begin to identify weight. These past human decisions were biased. I mean, we know it’s a sad reality. Your height should not relate to the amount of money you earn as, say, a Chief Financial Officer, but we know that there’s a very strong correlation between your height. The taller you are, the more you earn as a Chief Financial Officer even though there’s no relation to the job with height. And so, we know that humans, we all have inherent biases even if we try not to. That’s actually why I’m a big fan of the phrase, “collective intelligence” and what collective intelligence is. How do you arrange both human and technology nodes so they make smarter, more intelligent decisions without, I mean, you can never remove bias, but as less biased as possible? So, I think it’s worth talking about not only doing pioneering projects on artificial intelligence and learning what works and doesn’t work, but also doing experiments on collective intelligence that is a combination of humans, as well as technology nodes, to ideally actually begin to remove bias from both groups.

Michael Krigsman: So is this issue here the fact that we’re now asking machines to make decisions that people otherwise would have made regarding judgement? Is that the issue that’s kind of driving the ethics? What’s driving [it]?

Kay Firth-Butterfield: Certainly, that’s one of the issues. And if you think about what Europe is doing with the general directive that will come into force next year, so very soon, they’re saying, “Well, we want transparency, we want openness.” So, if a machine is making decisions that adversely affect citizens of the EU, we want that machine to be able to explain itself, because the human would have been able to, and so therefore the machine would be able to. So, I think it’s very much around that human-in-the-loop notion. That previously human beings were doing this, and now we are increasingly giving over these decisions to our artificial intelligences.

Michael Krigsman: But David …

David Bray: Just a bit on there real quick. I was going to say, and I think, I would even go one step further. That it’s not just about handing over judgement and decisions to a machine that a human would do otherwise. It really is about the loss of a locus of control, either a loss of a locus of control for the individual. So, when you’re in an autonomous car, you know, you are not driving; the car is driving, unless you have the ability to stop in the next … [garbled text], but again, within milliseconds that might not be possible. It’s really about are we handing over control to an entity that we are willing to trust that will be as fair, if not more fair than a human. And that’s where it gets to what Kay said with Europe. The interesting thing with the Europe question is it applies not just to artificial intelligence but to what they call “autonomous systems”. So, the question is, “Will this require companies like Google and Facebook to be able to explain why certain results showed up at the top of the page as opposed to the bottom, and are they actually going to be willing or able to do that?” Because, that gives them their search algorithm, their ranking, in some respects intellectual property. And it’s going to create some interesting challenges of how much are companies actually going to be able to explain why the system is doing things a certain way, and at the same time protecting intellectual property. And I think it’s going to be the interesting experiment for the next two or three years is, “How can you do that and at the same time, preserve possibly your unique advantages in the organization?”

Michael Krigsman: But David Bray … Please, let me … So David, let me just interject here. So how is this different from what currently is happening with existing technology, because Google and many other companies do personalize the data that is presented to us, and so these challenges are there. So, why is AI any different?

David Bray: So, I think it’s just the scale at which it may be used, and the scale and the impacts of the decisions. I think we’ve always had, well, there’s always been the ability to tailor your experience even before the Internet in terms of what services were provided to you. People were making sense by hand what things you should receive in the mail in terms of ads, or what was called “automated data processing in the 1970’s. And it’s interesting to note that as Kay mentioned about the law, obscenity laws came before privacy laws, and that obscenity laws came about in the late 1900’s because people started moving in the cities. When people were living closer together, now they realize they might look out a window and see something they don’t want to see. So, that led to obscenity laws. And then privacy laws came back in the 1970’s when you started doing automated data processing. And again, these machines were nowhere near as fast as what we have today, but that somehow there could be a correlation of “This person lives at this address; they’re getting this type of heart medication; they also are on this type of insurance.” At what point do you need to say, “Well, those are correlations you shouldn’t draw unless that person is giving consent?” So I think artificial intelligence, much like those things that came before, it’s just the scale and the impact of what this machine might be able to make decisions that will impact your life will be. So you’re right it’s the same trend. But, I think it’s the sheer scope and impact that I think we need to take into consideration.

Kay Firth-Butterfield: And I think it’s coupled with things that are going on in our society, which gives it more, a bigger reach. Say for example our aging population. You know, if we decide that we might go the same route as Japan, and introduce more artificial intelligence devices in the form of robots for example into our elder care, then that’s going to make the technology so ubiquitous that the scope is so much broader. The other way that we might go would be obviously immigration, too, so some of the care needs that we have for our elder population. And again, there’s going to be different choices around the world.

Michael Krigsman: So the issue then, is one of scale and then one of pervasiveness. Is that why the issue of, the challenge of AI ethics has received such a high profile in recent days?

David Bray: I would agree… Go ahead, Kay.

Kay Firth-Butterfield: I was going to say “Yes!” in a nutshell, yes. But I think that actually the AI ethics point really came to the general lips of media, and those people who weren’t really thinking about this, through perhaps DeepMind’s original creation of its ethics board. And obviously, you know the seminal quote from Stephen Hawking on the first of May, 2014, when he said that this could be the best thing that we’ve ever done, or our last. And I think that really captured the attention of the media. And where there were lots of us thinking about these things before, it’s become so much part of a more public conversation now.

David Bray: And I would build on that and say that I do think it’s the winning of Jeopardy by Watson, the winning of a Go championship; there’s been a series of events that are making this much more real to people. If you think about it, how many of us in the last ten years have been on a plane where at some point in time, and probably for a majority of the flight, the plane was on autopilot? And none of us were running around saying, “Oh dear, this plane is being flown by itself!” You know, it was always there in the background. It’s just now becoming increasingly visible to people. Sure, it’s actually raising interesting questions of: Will this impact employment? Will this impact jobs ─ the nature of work? And so, it’s raising a lot of interesting questions. I mean, the good news is we’re talking about it in some respects before the technology’s even able to do some of the things that people are claiming it might be able to do in the future.

Michael Krigsman: Kay Firth-Butterfield, you are one of the top legal scholars in the world and ethicist, and thinking about these issues. And so, when it comes to AI ethics, is there kind of a framework, or an approach that we can use to break it down and look at the problem?

Kay Firth-Butterfield: I think that the way that I have always seen it is that we need to be thinking about responsible design, and also, companies that create AI taking responsibility. Either we’re a nascent industry, or at least a young one, but we need to have a level of maturity around the product. And so, what I was doing when I was at Lucid.ai, was really sort of talking about the fact that we need to be thinking about responsible design from the moment that we have the idea of a product, through to the way that it’s sold and used. And so, I think it’s a continuum, and it’s something certainly that in my new role at AI-Austin, we’re going to be looking at, and working with companies who not only producers of AI, but users of AI.

Michael Krigsman: David Bray, and you have been in public service for much of your career, and have had quite a number of roles looking at these kinds of issues. So Kay talked about responsible design, really from building it in from the ground up, looking at the technology through the development, through the point of release as a product. What is your thought on that?

David Bray: So, I think I’d say i’m very supportive. I would say from my perspective, having served in public service as well as in the private sector, you can plan for something to be used a certain way, or designed a certain way and the reality is humans will find things that you never intended, both good, bad, and mundane. Unfortunately when the Mumbai terrorist attacks happened, the attackers actually used the things that you and I use on a daily basis for web searches. They used GPS. They used social media unfortunately both to plan the attacks and to execute. And, I don’t know of any engineer [who] could have changed the design of web searches or GPS or social media to prevent that from happening. And so, if we recognize that yes, design is a good part, but there’s still going to be the human agency that is going to possibly use it in ways that you never intended it and it may even be good ways that you never intended.

I really want to make sure that when we’re thinking about how we design, and actually how we begin to incorporate these things into society, how we can give people the ability to actually indicate their preferences for what they want done, either with them, to them, with their data associated with artificial intelligence. So there may be some people like, “I’m all in! I would like to have an autonomous car. I’d like to, when I retire, have AI providing care, and that’s something that I have now given my consent to.” There may be other people wanting to live off the grid and that’s also perfectly fine, too.

So, how can we continue to recognize … It’s almost an inversion of the Golden Rule, which is, you know, “Do unto others as you would have [done] unto you.” It’s almost sort of the interesting tweak to say, “Do unto others as they will permit you to do unto them.” And then, that’s again recognizing that what artificial intelligence is, is giving up some control. It’s recognizing that something else is making a decision, and in some respects it could be the same thing for a human, but it’s letting the human that is having those actions occur, so it has the ability to indicate their preferences as to what they’re comfortable with. And ultimately when you do do those things when it’s in the public space ─ having openness and transparency ─ so, as Kay mentioned, it’s not just being able to explain why the machine made a decision, but also be able to indicate: What was its range of possibilities? What is it actually considering? What is it not considering when it makes these decisions? So, we can again have some informed understanding about the scope and sheer impact of artificial intelligence.

Kay Firth-Butterfield: Well, I’ll just echo some of those things. I think that everything that David just said is great, and really important, and leads to the need for us to have a much more open conversation about some of the things that we’re doing. One of the great things about having this great conversation with you, Michael, is that we’re reaching people who will be using AI and we’re able to have this interdisciplinary conversation, which is so important, that we have at this level and at a wider level.

Michael Krigsman: So, Kay, this issue of the unintended consequences of AI, of the use of AI, really any other kind of technology. We don’t know in advance how people will apply these technologies. How does that inform the shaping of laws, policy, and the ethical thinking as well?

Kay Firth-Butterfield: Well, yes of course, you know, with every technology that we’ve ever built as humans, there have been bad actors. And so, my raison d’être when I’m thinking about this, is thinking about things that we can do to be as safe as possible, and to educate people correctly in the use of the technology. But, I agree with David that there are going to be bad actors who are going to use technology in bad ways. The best thing we can do is try and stay ahead of those people doing those things. It sounds like a cop-out answer, but it’s, you know, since someone invented your rock, or picked up a rock and hit somebody else on the head with it, we’ve been having this trouble as human beings.

David Bray: Yeah, and I would actually reinforce what Kay’s saying. I mean, when the car came out, that allowed interstate crime, which was something that had never been possible before. I mean, you could not potentially drive to a state that you weren’t living in, commit that crime, and drive out and the local law enforcement wouldn’t know who you were because you were not a resident of that city. Does that mean we shouldn’t have cars? No, but I think that’s again, we should recognize that again, it’s how we humans choose how to use things, whether it’s good or bad, that will have impacts. What can we do as Kay mentioned, to educate the public, to ideally make it available to as many people as possible. And I think it gets to another ethical dimension that’s worth talking about, which is I personally would like to see artificial intelligence be available to as many people as possible. So, it’s not just a niche only available to a few. And so, I applaud efforts like OpenAI and other endeavors that are really rolling it out so it can be used used by everyone and it’s not limited to a few niche actors, because I think that’s going to be so key to making sure we can have these informed conversations. I would not be surprised, I hope, in the future, you have students as early as elementary school and middle school beginning to do experiments with artificial intelligence so that as they grow up , they are much more aware of what it can or cannot do, and how it can enhance their lives.

Kay Firth-Butterfield: And I think that’s really an important thing because, you know, one of the things we have been talking about is taking some control for ourselves as individuals. And unless we empower people to do that through education, then people are not going to be able to take back that power. And so, and also I think that there’s an issue around what we’re seeing in social media at the moment. I have seen a lot it of Twitter in the last two days that people are saying, “Oh well move. We have to defend our privacy.” And there’s a lot of fear of surveillance ─ switching to Tor, and more secure uses of email and things like that. That is not a positive sign for the way that some people in our society are thinking about artificial intelligence.

Michael Krigsman: Well of course, there’s also great concern that the robots are going to be taking over our jobs, and especially in light of the political climate today, that’s particularly so, particularly pronounced, those concerns. And so, what about that? That must intersect the ethical perspectives in one way or another as well. How do we think about that?

Kay Firth-Butterfield: Well, I think that we do have to be very worried about it, because AI, in my view, is a technology that will benefit mankind or humankind enormously. And, there are some great challenges that we have as humans and for our planet that we really can’t solve without AI. And so, we certainly don’t want to see a groundswell of opinion against AI by people who are losing their jobs to it. We’ve all read for the Oxford Martin study, and the Bank of America [Merrill Lynch] study that says that 47% and I think 52% of jobs in America currently done will go to automation in the next 15 or 20 years. But we have to think about the complexity of job loss, because we don’t know what the future jobs are going to be. But what we do know is that as people lose their jobs, and some think that hasn’t been done in the past, we need, and can use AI to retool and re-skill those that work that workforce to create the jobs of the future.

David Bray: So, I would build on that, too. I mean, if we go back to the analogy of when the car came out, I’m sure there was a large portion of the world’s population that were involved in raising horses and taking care of horses and things like that. But, that didn’t mean we shouldn’t not recognize the car as an advantage, and because people were worried about losing their jobs taking care of horses. And so, I think this raises a question about as jobs are lost because they can be automated, what do we as society owe those people whose jobs have been displaced, to help them re-tool, retrain as best as possible for something else. And the jury is out as to whether more jobs will be created vs. destroyed as a result of artificial intelligence. So, we need to monitor them and be aware of it. We must also be aware of there is what’s called the “unemployment effect” on people’s health, which is we humans need to have a purpose. And so, a future in which we don’t need to work because artificial intelligence is doing everything may actually not be a nirvana as it sounds like because we won’t find purposes. Or we may find purposes in advocations as opposed to vocations. But that’s a collective conversation we need to have, which is, “Where are we going together as a society? How can we make sure we bring as many people along?” As Kay said, ideally make it so they’re not as fearful of artificial intelligence.

I personally think the future is really going to be about pairing humans with AIs. Right now, artificial intelligence is a lot like a five year old. So, for example, if you have a five year old, none of us teach a five year old specifically to speak, sing, subject, verb, and object. We just expose the four- and five-year old to enough language before they actually begin to construct sentences on their own and eventually they might say something like, “I walked to the school today.” And when you ask them why they say it that way, as opposed to, say, “To school today I walked,” the five-year old is just going to say, “Well, I never heard it said that way before.” They’re not going to have a deeper reason why. And so, I think right now, where there’s going to be plenty of automation that’s possible by machines and by artificial intelligence, when you ask the deeper question of “Why right now?” It’s just going to be because that’s what I have seen in the data, or that’s what I’ve never seen before. It’s not going to be telling you the deeper reason. That’s going to require humans at the moment to be able to dive deeper. And so, I think it’s really going to be about pairing humans and artificial intelligence, at least for the next 20 years in my opinion.

Kay Firth-Butterfield: I certainly agree with that and I think that it’s a great, great thing for us to have the augmentation of AI as humans. We’ll be able to do our jobs better, and as I say, perhaps solve some of these intractable, currently intractable problems. I think two points I wanted to just come back to on David’s comment: One is that it was easier for people who had been looking after horses to perhaps move to looking after cars. You know, grooming a horse, and polishing the car. They’re manual labor. If we are looking at a change which actually requires a change from manual labor to coding, or any of those sort of things, then that’s a much bigger gap to bridge and we need to think about how that might be managed. And also, as a historian by background, I really worry about the analogies with the industrial revolution because the industrial revolution hurt a great deal of people over a long period. And yes, we came through it and we developed something better. But, it looks as if this industrial revolution will be much faster, and we need to prepare not to hurt as many people very quickly.

David Bray: And, I think that’s very true actually because it’s worth noting that when the industrial revolution happened, and people moved from working on farms basically 24/7 to factories, and doing basically rote, repetitive actions, aside from the fact they’re doing rote, repetitive actions for twelve hours at a time is not healthy for anyone, so what was also very painful was the way society collectively dealt with that transition from agriculture to industry was actually through alcohol and gin. And so, similarly when we made a transition from the industrial revolution to the post-WWII era, in which people didn’t need to work as much, and actually worked 9-5 jobs, the interesting thing that happened with that, was there are some that actually argue the way we dealt with that was through TV dinners and sitcoms, which, while not as bad as alcohol, we still needed an outlet. So Kay’s absolutely right. It’s going to happen in a much shorter time period. It may be as big, if not bigger change. And so, having again that conversation about what do we, as society, owe each other is really key to have now, because we don’t know! And none of us know if the job we’re currently doing today in two or three years will be done better by machines.

Michael Krigsman: You know, one of the big difference I think between this change that’s taking place, in terms of the fears around job displacement vs. during the period of factory automation is when factories were being automated, they brought in robots, and people could walk into the factory and you could see, “This machine is doing this task, and it’s a physical thing and you can see how this task is now being done that I used to do, and so I understand how my job is being displaced.” However, with AI, I think part of the fear is there’s this unseen hand, there’s the computer that’s a black box and we have no visibility or transparency into it, and it’s changing things, it’s making my job, or I have the fear it’s making my job go away. But it’s not tangible. And that changes the psychology of how people relate to the technology.

David Bray: Yeah, I would agree. My experience is, again, I previously worked in the Bioterrorism Preparedness Response Program, so we dealt with bioterrorism. And what makes bioterrorism such a challenging subject is that it is not seeable. That if you say something bad has happened, even if you haven’t done anything, the fact that it’s not seeable makes people worried, makes people fearful, and makes people worry something’s occurred. And so, we humans don’t do well with things that are invisible. And right now, most artificial intelligences are not written in a way in which you can easily show what they’re doing. Like you said with the factory example. So I think part of the interesting ethics of design going forward is, how easily can you elucidate both what the machine is designed to consider - recognizing again that it’s not going to be like A+B+C+D. That’s not what artificial intelligence does. It’s goal-bound. It’s often exploring a space much larger than you can express in a diagram. But, something that can help people understand what it is possibly doing, what it is not possibly doing in order to help people overcome that possible fear factor.

Kay Firth-Butterfield: And I think that that’s interesting because actually you have two sides of the equation here. When we have the AI that can’t be seen because it’s locked away in our computers, or in the “black box” as it’s often talked about. But, when we actually do put AI into robots, it’s very interesting because we then see them as being created in our own image. And I think that that’s really interesting. You see robots being called, and the people relating to robots almost as if they’re humans.

David Bray: Right, yeah. And well even with computers, how many of us have wanted to hit a computer because it did something we didn’t want it to do, thinking it would somehow respond to the fact that we hit it. But, you’re right, there are these cases of young children being educated through a robot, and then they become their friends and they hug them. So, we do anthropomorphize machines if we can see them.

Kay Firth-Butterfield: And, just I was reading today that Google’s looking at cybersecurity, and had named the three algorithms with human names, that they were using. [Laughter]

Michael Krigsman: So we want to have warm, fuzzy AI algorithms that make us feel good. We have, really, just a couple of minutes left, and so let’s just finish. Kay first, and then I’ll ask David just in a minute: what advice and suggestions do you have for people who are thinking about the law in, and the evolving law in regard to AI?

Kay Firth-Butterfield: Well I think the advice to lawyers is that very soon, you will be receiving… You will see those cases coming across your desk, and you need to get up to speed around artificial intelligence. And, what’s going on in artificial intelligence now, I think just going back to that job creation thing, actually there are going to be a lot of jobs around, so we’re not going to kill all the lawyers by automating them just yet, because we are going to see experts needed in court. For example, instead of cross-examining a driver, we might have to cross-examine an algorithm, a.k.a. an expert on the system. If you are in any business, you need to be looking at what AI can do for you, and what the impact of AI will be on your business. So there are two pieces of that, because I genuinely believe that AI will change everything. And if you don’t start looking now, you will be too far behind.

Michael Krigsman: And David Bray, your thoughts on guidance for policymakers who are looking at the policy, the public sector policy, and regulatory side of this. Any thoughts or guidance for us, very quickly.

David Bray: So again, I’m wearing my Eisenhower Fellow hat, not my FCC hat. What the conversation I had in Australia and Taiwan is, cloud computing in some respects is the appetizer, artificial intelligence and the Internet of Everything is really going to be the main course that we’re going to be consuming over the next five years. And, I don’t know if I can necessarily give advice necessarily to policymakers, but I’ll say what Kay said. Any organization and any entity should recognize that this will disrupt how you operate and it’s a question of whether or not you are very intentional about it. Or, someone else is going to do it to you. So, start on that journey now. Start having conversations. And if there’s one thing I really call out, it’s look at the OpenAI effort and other efforts like it that are trying to make this open and available to people as a place to try to either begin experimenting, or if you don’t have the time to experiment, maybe have some of your employees begin to experiment what’s possible. Because, we’re only going to get the expertise we need to know in this era through the experiments that we need to do with artificial intelligence.

Kay Firth-Butterfield: And I think just to quickly add to that, we need to have more networking. We need to talk about this more. So, thank you very much for this opportunity.

David Bray: Yes, thank you Michael for the great service!

Michael Krigsman: Well, thank you two! This has been an amazing conversation, and in about a week, we’ll have the transcript up on the CXOTalk site, and you can dig in and watch the replay. Just a tremendous amount of information. You have been watching Episode #203 of CXOTalk. Our guests today have been David Bray, who is here in his Eisenhower Fellowship… “wearing his Eisenhower Fellowship hat,” is the right way to say it, although he’s also the CIO of the FCC. And, we have been talking as well with kay Firth-Butterfield, who is truly one of the world’s leading experts on the law and ethics of AI. And, a clear message has been that AI is going to be changing a lot of parts of our lives, and for all of us regardless of the job that we do, the time to start learning about this, thinking about this, and understanding more of it, that time is now. So, thank you so much, and we have another CXOTalk tomorrow, actually. So join us! Thanks so much everybody, have a great day. Bye-bye!

Building the Business Case for Data

Irfan Khan, CTO, SAP
Irfan Khan
Chief Technology Officer
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

The case for digital transformation starts with engaging stakeholders around the core business model and outcomes they expect. Of course, IT concerns are important, but transformation must focus on the bottom line, which goes beyond IT alone.

To accomplish, be sure the platform considers future processes as well as current ones. Without the right platform, the business model itself might become unsustainable in the face of change. Therefore, technology foundations must evolve at the same time as business foundations.

To engage stakeholders, create a succinct point-of-view document, limited to a single page, which summarizes likely benefits to the business. Be sure stakeholders understand that digital transformation is a business-wide process intended to achieve very specific outcomes.

Building the Business Case for Data

Irfan Khan: Setting a solid case for your business transformation is imperative. It starts off with engaging the stakeholders, and that’s across the spectrum of both senior leaders in the company, but also the business users of course as well. If we understand that the disruption we are introducing to the business is not just there to provide another iteration of IT to get their work done, it’s really there to provide greater profitability for the business, provide greater shareholder value, and ultimately to product new business options and new business models, that will essentially provide greater monetization in the future.

So the platform needs to be significantly strong enough and foundational to support not the weight of current operations, but future operations. Business processes do evolve, they do change, so you need to be able to create more of a virtual experience, a virtual understanding of where data is today, and how the evolution needs to be understood in the future as well. So this is really a very significant part. As the processes, and of course your branches evolve, your translations into the technology foundations have to also evolve at the same time.

Having met with many customers, who are all trying to embark on their own journeys in terms of digital transformation, the one piece of advice I typically give them is, “Be succinct. Try to define exactly what the outcome should be. And a good approach to doing this is to actually create a point of view document, and I would literally limit this to a single page. If you could write down, in a succinct manner, a very crisp fashion, what exactly the benefits to the business would be, what the outcome [is] that you would be able to achieve, and that could be communicated widely…”

Ultimately, a digital transformation is company-wide, enterprise-wide. It’s not restricted or limited to one particular business user, or one line of business. Let’s get the engagement of all the stakeholders, make sure that the understand the outcome that they’re all trying to drive towards, and ultimately the success that we’re able to drive, overall, n2n, for the corporation.

Digital Transformation and the CIO

Martha Heller, Founder and President, Heller Search
Martha Heller
Founder and President
Heller Search
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

Business expectations of the Chief Information Officer role have changed dramatically, forcing CIOs to adapt and evolve. This episode explores what's happening with CIOs and offers practical advice to both the business side and to CIOs themselves.

Our guest is author Martha Heller, who is president of Heller Search Associates. Before she established her career in executive search, Martha was Founder and Managing Director of IDG's CIO Executive Council, a professional organization for CIOs.

During her seven-year tenure at CIO magazine (IDG), Martha developed leadership programs for CIOs and directed the CIO Best Practice Exchange, a members-only network of IT leaders from top-tier organizations. Martha wrote a weekly column on IT leadership and led a series of executive events on IT staffing, career development, and leadership. Before CIO, Martha was an editor at Rutgers University Press.

Martha continues to engage with CIO audiences every day. She is author of The CIO Paradox: Battling the Contradictions of IT Leadership, and Be the Business: CIOs in the New Era of IT. Martha writes CIO.com’s Movers & Shakers blog, and her e-newsletter, The Heller Report: You and Your CIO Career, is read by thousands of IT professionals every week.

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Digital Transformation and the CIO

Michael Krigsman: Episode number 198 of CXOTalk. I’m Michael Krigsman, and CXOTalk brings the most innovative leaders in the world to talk about the impact of digital disruption on our world, on our society, and on our companies and organizations. Today, I am so thrilled, because we’re speaking with Martha Heller. Martha is a multiple book-author, and she is the founder of Heller Search Associates. Martha is a very prolific speaker at Chief Information Officer events, and without a doubt, one of the leading and most important thought leaders among CIOs, and supporting that CIO community anywhere in the world. so, I’m so thrilled to welcome Martha, and I want to say a huge thank you to Livestream, which provides our video infrastructure. And Livestream folks, if you are listening, we love you, you guys are great. Thank you. So, Martha Heller, how are you?

Martha Heller: I’m doing great! You’re making me feel like a rock star, Michael. I appreciate it!

Michael Krigsman: Well, I think in the world of CIOs, you are the rock star, and that’s no lie!

Martha Heller: My point exactly!

Michael Krigsman: So, Martha, tell us about the things that you do, give us some sense of context and place, and I see sitting next to you is your latest book, so tell us!

Martha Heller: Absolutely! So, thanks so much for the question, Michael. You know, I joined CIO Magazine back in the late 90s, when I started an online column for CIO magazine called “Soundoff”, and aging with the CIO community ever since then. So, I believe I have communicated some kind of message to the CIO community on a weekly basis for the last 17 years. So, if you do the math on that, that’s quite a bit of content, quite a bit of volume. In 2005, I decided to parlay that experience in those networks into the wonderful world of executive search, so my firm recruits CIOs and the folks who work for them, and boy once you’re trying to convince a CEO to hire a CIO, your knowledge of the challenges and contradictions of the CIO world becomes quite acute. So, at this point, I run a search firm, and I write all kinds of content for the CIO community, and I’ve just been endlessly fascinated by the evolving nature of that role.

Michael Krigsman: You know, I aso find it interesting that historically, and this is changing, historically the CIO role has been a male-dominated profession. You’re one of the top influencers in that community, and yet you’re a woman. So I find that’s also quite interesting as well.

Martha Heller: Well, you know, I’ll just address the gender diversity among CIOs. It’s true that the percentage of women who are CIOs is very, very small, and you know, what’s changing is that IT is not the only destination for women who are interested in technology. Marketing, for instance, is hiring technologists. Every company is becoming a technology company, so women interested in technology need not have IT on their career plan, there are many other opportunities for technology-oriented women. In terms of my role, being a woman in this sea of men, my background is journalism, and journalism, which has been more oriented towards gender diversity, let’s say, than IT. So even though I have chosen the wonderful CIO as my journalistic subject for the last 17 years, my background really ultimately is journalism, where you do have more gender diversity.

Michael Krigsman: In fact, we are doing a show next week with Andi Karaboutis, who used to be the CIO of Dell, and is now an executive vice president at Biogen, along with Kim Stevenson, who was the CIO of Intel, and is now Chief Operating Officer of one of their divisions, and we’re going to be talking next week about exactly these issues.

Martha Heller: What is interesting about that is both those instances, very strong female CIOs who are now leading organizations that have CIOs in them, while they have moved on to more broad business responsibilities. I’ll bring up another topic in a moment, and that is CIOs on boards, and that is a topic of great interest to the CIO community and corporate boards, “How do I get in on one of those opportunities?” In many instances, CIOs on corporate boards involve women, that, you know, whether it’s corporate boards trying to achieve diversity? I don’t know. But you have many instances of CIOs being appointed to corporate boards.

Michael Krigsman: So, you mentioned, you spoke about tensions, and of course the CIO role is changing, the goal of technology in the organization is changing, and maybe a good place to begin is what is your view of what exactly is changing in the world that’s driving CIOs to need to evolve?

Martha Heller: Sure. So, you know, I’m going to quote Bask Iyer, who is the CIO of VMWare.

Michael Krigsman: He was a guest on our show.

Martha Heller: It’s a small circle! You run in small elite circles. So Bask talks about the “CEO missing out syndrome”. And it’s where a CEO says, “I like my CIO. He, or she, has kept costs down, we’re as secure as I believe we can be, we’ve outsourced the appropriate functions, we’ve got good resilience, employee productivity tools; my CIO has done a great job, in fact, he’s done everything I’ve asked him to do! However, I feel like I’m missing out. There are cool things happening in Silicon Valley. You know Uber? What’s going to be the Uber in my industry, and are we really on top of the technology innovation that’s going to allow us to not be disintermediated? And, I look at my CIO and think, my CIO has never really been an innovator. He’s an operator which is everything I’ve asked for, but I’m going to go hire a Chief Digital Officer.”

So, that move, which many CEOs are making, can be fine, but it can also spell trouble for an organization for a number of reasons. CIOs who would like not to work under yet another technology leader, would be well-advised to step into the so-called “digital technology void”, and drive digital transformation not by themselves, but through partnerships and alliances as they’ve always done everything. But why now, what is happening with the CIO role? It is CEO-driven. And it’s in part, and it’s CEOs saying, “We need digital transformation, but my CIO’s an operator. I’m going to hire this other person. I’m not going to hire a new CIO.” So, digital transformation is driving an evolution of the CIO role toward influence, strategy, getting closer to the revenue stream.

What I will also say is that I’ve talked about the demand-side part of the CIO evolution, it’s CEOs expecting more from technology, more from IT. But I think CIOs themselves are also thinking, “You know, how am I going to spend this incredible digital revolution that we’re in the middle of? Am I going to sit around implementing the ideas of others, or am I going to move and go to another company, or change my role here, that allows me to really be a part of it, and to create a whole different layer, or level, of change?” So, ultimately, what’s changing is every company is becoming a technology company, software is making its way into products and services in ways that we’ve never seen before, that will have an impact on the leader of the technology function.

Michael Krigsman: So when you talk about the digital void, what do you mean by that, and how can a CIO fill those shoes?

Martha Heller: So I think one important concept to understand is that digital is not a function that requires a new executive and new hires and new resources. Digital is a capability that companies need to adopt across all of their businesses and all of their functions. CIOs who understand their roles as critical capabilities champions, “I have a uniquely end-to-end view, and I can see where we’re doing little pockets of digital innovation, where we’re not doing any innovation, which business leaders are spending on digital technologies and which aren’t. I need to create digital as an enterprise capability, and bring all of that to my company. Because if I don’t, we’re going to have little pockets of what I think of as ‘vertical digital innovation.’ We don’t have enterprise scale, we don’t have an enterprise strategy, and we’re entering risk into the organization.” So, you know, the “digital leadership void” is where CEOs are attempting to clamp down on, or get behind this concept of “digital”, so their instinct is to throw a new executive at it and throw a function at it, when really, digital is an enterprise capability that a CIO with an end-to-end view is capable of driving.

I’ll make one more comment on this. Whenever I talk to a CIO and they say something pithy or philosophical or existential, I steal from them and I tweet it out. I tweet out something that they said without attribution because A) we don’t have the character space and I want it to be more real-time than that. And then at the end of my book, I took my favorites from the last year and I listed them. And one of my favorites is when a CIO said to me, “We don’t need a digital strategy. We need a business strategy for a digital world.” And I think that that is a concept that all the leaders in the company need to have, rather than thinking, “What’s digital? We don’t know what it is, it could mean a lot of things, maybe it’s marketing, maybe it’s supply chain, maybe it’s employee productivity. Let’s hire a new executive to figure it out.”

Michael Krigsman: So the idea that the digital strategy is really a business strategy, rather than just a technology strategy, makes perfect sense. But I think the question then comes up: if you are a CIO and you want to be the person that is leading this, what are the obstacles that may interfere with that happening, and how do you overcome those obstacles?

Martha Heller: So, probably the greatest obstacle is the perception that IT is an operator, and that IT is about support and enablement, and not about innovation and strategy. And, what I would say to CIOs in their own companies is that if that perception is so embedded into the fabric of this culture and it is so deeply held, perhaps, this culture is not the right environment, not the right place for you to achieve your digital leadership dreams, and it may be time to pursue another opportunity where you have a chance to change those perceptions. That would be one major obstacle, and probably the most significant.

Another obstacle is the team. If you have a team of people who feel that their role is wait for the order, then take the order and execute on the order, you will not be able to achieve digital leadership, because you may change your relationship to the business but if your senior team hasn’t changed theirs, and you don’t have the right people in those spots, you will also have trouble changing that perception. But I would say, you know, the best way to start moving toward digital leadership is again, to recognize that digital is a competency and your job is to create that competency.

So I’ll give you an example: Dave Smoley is the CIO of AstraZeneca. And Dave said that, “We’ve got pockets of digital activity happening all over the place, but we’re not talking to each other.” So he set up a digital center of excellence. This is a cross-functional group, it does not exist in marketing, it does not exist in IT, and he brought in people from all different parts of the business that he felt had a leadership role in digital transformation. Once he got the center off the ground, he brought in a leader from another area of the business, someone with a lot of experience and respect, and this is critical, had some systems implementation experience. It’s fine and pretty to talk about the front end, but everything’s got to tie up with architectural integrity, and somebody with implementation experience will understand that.

He also made sure that in the center of excellence, he placed somebody in his IT organization. He happened to put his CTO in there. What he said was, “I want to avoid the scenario where there’s the digital conversation, and then there’s the IT conversation. There should be one conversation.” And so Dave incubated it, he got it off the ground, and then once he felt that the digital center of excellence was on firm footing, he moved on within AstraZeneca to climb other mountains.

Another thing that he did and that I’ve seen maybe CIOs of companies do, is that they take their executive committee on a field trip to Silicon Valley, where they meet with a whole host of digital vendors who are doing cool work in their field! That’s the work of a CIO in digital transformation, and those are some first steps, and it’s not easy, but what’s easy really? Those are some first steps CIOs can make to combat the past perception that IT enables and supports but does not drive, and to start getting that digital competency grounded across the enterprise.

Michael Krigsman: Yes. Dave Smoley is certainly a great CIO and innovator. Arsalan Khan on Twitter is asking how do you prioritize things like strategy, politics, education, from the CIO perspective? How do you move forward and fill that digital void, as you call it?

Martha Heller: Well, I would say the first priority is get your house in order. You know, if we think about Maslow’s Hierarchy of Needs, don’t talk to me about self-actualization before I have a roof over my head. Don’t bother having a conversation about strategy is no one’s getting their email. So, I would say, if you’re going to prioritize, the first thing you would prioritize is if you would have your basic fundamentals of IT in shape. The second piece is the team. If you have a team that can partner with a certain area of the business, and have a conversation that that business leader feels is peer-level conversation. You have that in order. The other thing I would look at is, do you have Agile development and DevOps and some other forward-looking development and delivery processes in place, and once you’ve got your house in order, it’s about making sure that you’re part of the conversations where vision and strategy are discussed. And I’ll bring up another concept now in response to our audience question.

This comes to me from Scott McKay who is the CIO of Genworth Financial. And Scott says, “In a boardroom, in an executive boardroom, around me you’ve got chairs around the table and chairs along the wall. The chairs around the table are filled with the ‘what’ executives. They decide what the company is going to spend its money on and what the company is going to do in terms of strategy. And then you’ve got the chairs around the walls, and those are the ‘how’ executives. ‘Oh, that’s the strategy? Thanks for letting me know, and here’s how we’re going to get it done.’ And CIOs have traditionally been in that ‘how’ seat, and it’s a good thing too, because ideas without execution are cheap! So, the ‘how’ executives, the CIOs spend their careers getting stuff done. Now, when IT has an opportunity not only to support business strategy but actually to inform and define it, it’s time for the CIOs to switch chairs and to get up to that ‘what’ table. Now you can’t let go of the enabling because everything has got to get done, but it’s about expanding their horizons.”

So, in terms of prioritizing, I would say get your house in order which includes your killers in your team, but after that it’s to do that gut check and make sure you’re ready to be that “what” executive. It’s a different level of peronal risk to say, “Here’s what we should do” versus how we’re going to do it. And then it’s getting into those meetings and making sure you understand the strategy. And then of course if you don’t understand the business context, don’t worry about the strategy. And then it’s just like everything else: vision becomes a strategy, strategy becomes goals, goals have timelines, and Lord knows CIOs know a lot about that.

Michael Krigsman: Martha, everything you’re saying, of course, makes perfect sense, but it also has built into it the assumption that the CIO has the business capability, the experience, the skill to take on this innovative business role, and work across silos and departments and organizations inside the company. And that can be a challenge as well.

Martha Heller: Well, that’s part of the job. You know, recently, I was giving a keynote to a large group of CIOs, and when I got to the section about being a ‘what’ executive rather than a ‘how’ executive, and doing the gut check and taking the personal risk to do strategy, a CIO stood up and said, “I don’t have the skills to do that. I like implementing. I could implement all day long.” And I said, “Great! Know yourself. Know that you like to implement, but don’t be surprised or confused or concerned when your CEO hires a Chief Digital Officer or Chief Innovation Officer.” So what I would say to those CIOs who say, “I don’t have the skills, I don’t have the business acumen, I’m happy doing what I’m doing,” keep doing it but understand that as the business becomes more technology-oriented, your role will be marginalized and new technology leaders who are not in IT are going to come on board and you’re going to have to deal with them as business partners. So, know if you don’t have the business skills or the business context and you’re ok with that, define your role accordingly. But if you want to be a digital leader, having business understanding is everything.

Here’s a great place to start. This is actually quite pragmatic and revolutionary all at the same time…Let me just finish this thought Michael… Here is a great place to start. Stop using traditional IT metrics to measure your team. Stop defining investments by 3-9’s and uptime and least-times, and start using the metrics of the business. JetBlue, for example, Eash Sundaram who was CIO of JetBlue but is now CIO and Chief Innovation Officer, he’s certainly someone who’s moved forward in this way, he no longer measures his team on any traditional IT metrics. He shares with them the metrics held by the entire airline, which is called “Departure Zero”. How many of our flights leave the gate 0 minutes after departure? He measures his team’s performance and he measures their investment priorities based on its impact on D-0. When you are measuring your team based on the same metrics that the business holds dear, guess what? You’ve got a level of business acumen that you didn’t have before, and so does your team.

Michael Krigsman: And you know, it’s a very interesting point. How common is it in today’s world that’s very much in transition?

Martha Heller: I would say, one of the biggest challenges for CIOs is letting go of a degree of traditional control that their own IT organizations have always had over technology. And when you let go of metrics such as uptime and resilience and cost, and start using business metrics, it can be very unnerving and scary for people who have not done that before. So I think that in the whole wave of companies that have been slow to adopt new technologies that have kept IT in their own silos, I would say that business metrics are a ways off. But, my book is filled with CIOs who are leading innovation in their companies, who are business leaders, and it’s become much more widespread. And I think we will see a permeation through IT organizations in all different industries of business metrics as the barometer of success rather than IT metrics. And a comment on that: when those CIOs turn around to manage their IT vendors, I’m sure they will be employing traditional IT metrics.

Michael Krigsman: We’re talking with Martha Heller who is a multi-book author and truly one of the most important influencers in the CIO community. And Martha, you have your most recent book next to you so please, hold it up for us.

Martha Heller: I do! Here it is right now!

Michael Krigsman: “Be the Business.” And Martha, let’s talk about the relationship between the CIO and these positions like CDO, Chief Digital Officer. And you explained how the CDO role comes about, which is there’s this “digital void,” as you call it, and if the CIO doesn’t step up to fill that void, the organization will hire somebody else who does. But in many organizations, that’s not even an explicit decision that happens. The organization or CEO says, “Hey, we need to get a CDO in here.” And so, what is the quote-on-quote “right relationship” between the CIO and other executives like the CDO, CMO that are all encroaching and overlapping with IT today?

Martha Heller: You know, I’m going to take a step back in answering that question and say that we have been in an industrial economy since, I would say, the very early 19th century. We’ve been in a digital economy for about five or ten minutes now. The industrial economy is all about “more assets, more plants, more real estate, bigger teams.” The industrial economy is all about building walls around companies to separate us from other companies, and building walls around our departments. The digital economy is very different. The digital economy is all about algorithms trumping teams. You can do something with an algorithm and you don’t need a team, and that is often a better way to go. It’s about leveraging partnerships and breaking down the walls between departments in a business. It’s about creating permeable boundaries so that our vendors are not held at arm’s length, but become part of our workforce. And so, the most important work for a CIO to do vis-à-vis her executive peers, as per your question, is to use an end-to-end perspectives to free executives from their traditionally-held vertical prisons so they can look up, across, out, at their digital future together. So it’s the CIO’s ability to get their peers thinking fundamentally different about their business, and I’m going to give you a great example.

So this is one of my very favorite CIOs, Kathy McElligott. She is now the CTO at McKesson, but when I interviewed her, she was the CIO at Emerson, the electronics company. So when she was CIO at Emerson, when she came on board, she said, “You know, we’re aligned, IT has a strategy that is aligned to where the business is going. However, this business is putting sensors in all of our products, we’re collecting a tremendous amount of data, which is great, but we have not crafted a business strategy that capitalizes on any of that. The very fundamentals of what we are and what we do as a business must change, based of Internet of Things and Big Data and all of that.”

And so what she did what she put together what she called the “Business-IT Strategy Board,” 25 executives across the business, and they want to meet quarterly, monthly, I don’t remember the frequency, and let’s talk about big topics. So in her first meeting, she got them all together, and then she realized they were all sitting around waiting for her to give project status updates. And she said, “That’s really not what this meeting is.” So she brought IBM in to really workshop a strategy with them, and then after that she really was able to run meetings about internet security, about Internet of Things, about, “What would happen if we put the customer at the center of everything that we did here?” Now, some of these topics had a technology bent and some did not, and that’s almost irrelevant. Her job, as CIO, vis-à-vis her executive peers, was to facilitate a conversation that allowed them to look horizontally and together at the future of the company, regardless of whether there’s a CDO or a Chief Information Officer in the mix. That’s the CIO’s most important work.

Michael Krigsman: But still, as a practical matter, the organizational boundaries and the politics in many companies start to come into play. So again, what is the right way for the CIO to interact with these peers?

Martha Heller: Well, I would say, you know, this is classic stuff, I mean I probably wrote this article in 1999 for CIO Magazine. But it’s understand your business partners’ challenge, understand in business terms; consult with them about the growth plans or challenges of their business, and then define an IT strategy to help them with that; and then oversee its delivery. I mean, that’s how you win friends. But when it comes to driving innovation, which is one of our topics here, pick a fearless executive for who you have successfully delivered in the past, who believes in you and has your back, and work with that person on something new and innovative, and use that as a test case. Once you’ve got a success there, as my friend Steve Gold, the CIO of CVS says, “Wash, rinse, and repeat.”

Michael Krigsman: So collaborate on an innovative and interesting business case with the right business partner.

Martha Heller: Absolutely, and use that almost as a marketing tool to bring in the more skeptical executives.

Michael Krigsman: That’s a really key point. Now you talked about putting the customer at the center, and how does that translate into the CIO and the CIO activities?

Martha Heller: Well, I think for a long time we looked at business opportunities from the perspective of our supply chain, or our manufacturing processes, or in terms of what makes our numbers move in order to create shareholder value. Well, now we’re in a situation where customers call the shots. Customers have a lot more flexibility in who they do business with, customers have different thoughts about the style in which they want to to business, and companies that are not acknowledging that the customer is at the center of everything that they do are going ot be spending money in the wrong places.

I would also issue a cautionary tale. Putting the customer at the center of everything you do was a strategy that Kathy McElligott at Emerson brought forth to her team. But here’s where I would have a cautionary note about that. When companies imagine the idea of digital transformation or innovation, very often they think about marketing, right, and the customer-customer engagement and marketing. “That’s our digital, that’s our technologies, that’s where we want our CIO to spend most of his or her time.” But the fact is that digital is not marketing but with social media instead of print ads. Digital is much more than that. Digital is supply chain. Digital is employee productivity. Digital is the way we engage with our partners. So, you know, while, sure, you want to put the customer at the center of everything you do, you want conceptualize digital transformation as something larger than at that point where the customer and the company meet.

Michael Krigsman: Now, we’re going through some of the strategies that you go describe in your book that CIOs should adopt to be successful, and an interesting one is you talk about storytelling, and we hear storytelling again in relation to customers, we hear storytelling associated with marketing. So when you say that the CIO should be a storyteller, tell us what you mean by that.

Martha Heller: Sure. So ever since we were little, we loved to hear a story, right? And for those of us who have children, you know exactly which books have the pages falling out of them because we have to read the story so many times. And stories are a great way for two people of different backgrounds to get to a common ground on something abstract, and CIOs are always in a position of having to get to common ground on something abstract. So, I’ll just give you a quick example. Malini Balakrishnan, when I spoke to her, she was the CIO of a construction company, and when she got there, she said, “We have such old technology, we’re having outages left and right, and what we need is an ERP.” So she went to the team and said, “We need an ERP” and the CFO said, and this is a verbatim quote, “You will pry the old system out of my cold, dead hands.” So she thought, “Ok, I need another approach.” So she came up with the idea of taking a clip from the movie “Speed,” and in that clip, Keanu Reeves is a detective and he’s on a bus that’s got a bomb on it that will explode if it goes less than 50 miles per hour. So he has the idea of bringing another bus onto the highway, got to keep both of them going at 50 miles per hour, and everybody from the one bus has to walk across a rickety scary plank on the speeding buses from one bus to the other. So, she presented that clip to the executive committee and said, “This is our ERP situation. We’ve got to get a new bus ready while the old bus is running and everybody’s got to walk from one bus to the other.” And once she was able to show that clip, she was able to get them to the point of understanding the need for an ERP, and of course, people mentioned that story to others, so she had people carrying that story forward for her, where if she had shown an architectural schematic of the legacy systems overlaid with the ERP, she would not have had as much of an understanding of what was needed to move forward within the company. So that’s just an example. She didn’t have to come up with the story herself. She found something great that everybody could relate to, that’s a great way to get executives on the same page, at least initially, in moving forward.

Michael Krigsman: So the issue here is communicating in a manner that the business will find compelling, particularly that the business will find relevant and meaningful to their situation and that will push the business, therefore, to make the change that you as the CIO want to be made.

Martha Heller: Absolutely! I’ll give you one more example, and this was the CIO of a large pharmaceutical company who said he was having trouble getting his fellow executives to understand the multiple roles that IT plays. So he hired a photographer to take an aerial view of a three lane highway. In the highway you had one lane, motorcycles, in another lane, taxi cabs, and in another lane, big 18-wheelers. And he said the 18-wheelers are our global processes and our global technologies, we’re not creating change there, don’t even bother asking us to change that, that’s solid. The taxis are the more localized solutions for different regions that need something more specialized, and the motorcycles are pockets of innovation, new, cool stuff we’re doing, and with time, the motorcycles become taxis and the taxis become trucks. But he said, after he walked out of that meeting, having shown that aerial view, he saw the light in the eyes of his executive committee. So a story doesn’t have to be a fable. It can be a photograph, it can be a pie chart, but it needs to be designed to expressly communicate something abstract to a variety of audiences.

Michael Krigsman: So relevance is at the heart here, and we hear about relevance and the CIO. So let’s talk about factors that make a CIO relevant to the business.

Martha Heller: I love that question because I have a great answer for it. And this comes to me from the CIO of GE, because you know, Michael, I have no original thought, all I do is take the good thoughts of CIOs and put them together in a palatable form. But what Jim Fowler, the CIO of GE is concerned about is the relevance of CIOs and the relevance of IT and he says that, “We have a generation of workers graduating from college and coming into our businesses, and they are self-helpers. They want to create their own algorithms, their own digital tools, and they don’t want to wait around for IT. So for IT to stay relevant, it has to find a way to embrace that innovation, and be a catalyst for that innovation.”

So I’ll bring up the concept of “shadow IT” for a second. When I think about that old-school style of IT saying, “No shadow IT on my watch! No business executive is going to go out and buy their own technology and damage my architectural integrity, and introduce security risk and cost challenges into my infrastructure,” I imagine a man alone on the beach with his hand up, and a tsunami is coming over the beach. Well, that CIO can go ahead and put another hand up, but it’s not going to stop the rise of workers who want to be much more powered with the ability to create their own technology solutions. So Rob Lux is the CIO of Freddie Mac, and when he joined Freddie Mac, there were a lot of concerns about end-user computing, that is business leaders who hired their own development shops to create their own applications. Well that’s all well and good until those applications become mission-critical and have performance problems, and then they call IT to say, “Hey,” and the phrase they use is “productionalize,” “Can you productionalize?” And IT would say, “Boy, it would have been nice if you had involved us a little bit earlier.” So rather than clamping down on EUC’s, or End-User Computing, Rob created a development platform to allow end-users to go crazy! Develop your own tools, but do it in a secure environment using these tools. So a real concept here that I want to get across is, it’s one thing to say to IT, “Be the business,” but another thing we’re really saying is, “Let the business be IT.” IT does not own IT innovation, and delivery investment decisions and adoption, or even development! If end-users want to develop, they’re going to develop. Let them do it. So give them the platforms to do that. So that is being a catalyst and staying relevant, rather than saying, “Yeah, I’ve got to wait for IT.” That’s a perfect way for CIOs to become obsolete.

Michael Krigsman: We have about five minutes left. So it seems that the core of what you’re saying is that the successful CIOs are finding ways to engage the users, not put up boundaries, but invite the users in.

Martha Heller: That’s exactly right! So what we’re starting to see, and I’m glad you mentioned we only have five minutes because, you know, I could go on all day long. But, I want to bring up an important concept, and I’m seeing CIOs replace titles in their organizations, of, you know, this is an applications manager. This person has responsibility for all the technologies. And instead, they’re starting to talk about product management. Whether that product is something that will hit the external market, or whether that product is a finance system that’s for internal use only. And so what we’re starting to see on these product teams are cross-functional teams, so marketing, business analysts, business development, IT. You know within IT you’ve got apps and ops and architecture all on these same teams. And in fact Jim Fowler, CIO of GE, calls it a “teams of teams” structure. So when you conceptualize email as a product, or ERP as a product, suddenly you realize, on that product team, you can’t only have people from IT on that team, you need end-user representatives on that team. Product teams blur the boundaries between what is IT, and what belongs to the, quote, “business” that IT serves. So that product management, and one of the chapters in my book is called “Think Product” because as software makes its way into most companies’ products, where does IT development stop, and product development start? That is a blurry line that product leaders and CIOs need to start figuring out, because that is where a lot of innovation can happen.

Michael Krigsman: So we have just two or three minutes left, Martha, and would you summarize the distilled essence of your advice to CIOs. What’s the bottom line here? What’s most important?

Martha Heller: I would say that what’s most important is that 1) CIOs start to conceptualize their role in the organization, and this comes to me by the way from Cole Chapman, the CIO of the Gap; “As an internal professional services firm, that professional services firm provides information security, software development, product development, management consulting, email, data center hosting, vendor management, and once you see yourself as the CEO of a professional services firm, providing all these services out to the business, suddenly those boundaries in organizational design is all going to become clear to you. So that’s one. 2) Let go of control. Not everybody who uses the tools of finance in a company report into the CFO. Not everybody who considers themselves a developer needs to report into IT. Let your people go. Get into the digital mindset where empire-building is out. It’s about collaboration, blurring boundaries, letting go of control. And here’s the critical one: 3) Despite the fact that you run an organization, CIO, that is not your primary role. Your primary role is to use your end-to-end view and all of your analytical tools that demonstrate what is going on in the enterprise and become the critical capabilities champion of your company. Let your executive peers know what your company is good at, where it needs improvement, and that is where they should be spending their precious investment dollars. That’s your job.

Michael Krigsman: Wow, well, Martha Heller has given us a textbook on how to be a CIO. And there it is! You’re holding up the book, Martha’s most recent book, and what an amazing show this has been! You’ve been watching Episode number 198 of CXOTalk, with Martha Heller. And if you’re a CIO, catch the replay. Go back to the CXOTalk site, there will be a transcript up in a few days, and you can read it, and there’s your textbook. Martha, thank you for joining us today!

Martha Heller: It was my pleasure, Michael. Thank you.

Michael Krigsman: And I hope you’ll come back and you’ll do it again another time.

Martha Heller: Are you free tomorrow?

Michael Krigsman: [laughter] Next week would be good! Everybody, thanks so much for watching. Come back next week, we have two shows, they’re both going to be great, I’ll see you soon. Thanks, bye-bye.

Leadership Lessons from a Fighter Pilot

Dani Golan, CEO and Founder, Kaminario
Dani Golan
CEO and Founder
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

As a fighter pilot in the Israeli Air Force, Kaminario CEO, Dani Golan, learned that the right team enables an organization to whatever it wants. Being agile, responding to changes in business and technology, all require leadership and teamwork.

In today dynamic business environment, organizational agility is essential skill for providing continuous value to customers.

Leadership Lessons from a Fighter Pilot

Michael Krigsman: I’m Michael Krigsman, and we’re talking with Dani Golan, who is the founder and CEO of Kaminario. Dani, how are you?

Dani Golan: Excellent, Michael. It’s great to talk to you.

Michael Krigsman: And, you are talking right now from Israel, and I see that you have a large photo of a plane, and you have models of airplanes behind you on your desk. So, tell us about that. Why do you have these models?

Dani Golan: So, this is part of my background. I used to fly planes, I used to be in the Israeli Air Force for many years, and it is certainly a part of me.

Michael Krigsman: So, being in the air force; being a fighter pilot - how does that inform your leadership style, and from a leadership perspective, what did you learn?

Dani Golan: That is an excellent question, Michael. If you look at what it takes to fly a jet, I would say there are two major elements. The first and most important one is that you will never find a solo plane in the sky. It is always part of a unit. You’re being taught from Day One that it’s all about teamwork. In combat flying, it means life or death; and in business, it means absolutely the right team can perform anything. Business can change, technology can change, but with the right team, you can accomplish anything. That is the biggest lesson I’ve learned, and I try to absolutely gear to this in Kaminario.

The second element is important and relevant to the modern business world. The modern business world is far more dynamic, far more agile than ever before. And, if you look at our business, IT really fought back in adapting to this brave new world. IT is slow to change, expensive, complex; really, the same dynamic nature that you learn in the air force: that you need to adapt very quickly, and which we really bring into every part of Kaminario. It’s how we act. It’s the product that we developed, and the value that we provide to our customers. It’s really our dynamic nature at Kaminario that appeals to the modern business world.

Disruption and Resiliency: Lessons from 9/11

Dr. David A. Bray, Chief Information Officer, Federal Communications Commission
Dr. David Bray
Federal Communications Commission
Karen S. Evans, Administrator (former), Office of Electronic Government and Information Technology
Karen S. Evans
National Director
U.S. Cyber Challenge
Tony Summerlin, Senior Strategic Advisor, FCC
Tony Summerlin
Senior Strategic Advisor
Federal Communications Commission
Michael Krigsman, Founder, CXOTalk
Michael Krigsman
Industry Analyst

The events of 9/11 changed how we think about leadership, disruption, and the ability of organizations to survive and be resilient in the face of change and even disaster. On the episode, three seasoned leaders from the federal government share their experiences and lessons learned.

Dr. David A. Bray currently serves as the Chief Information Officer (CIO) for the Federal Communications Commission (FCC), an independent agency of the United States (U.S.) government. As CIO, he supports the eight current goals of the FCC in the areas of broadband, competition, the spectrum, the media, public safety and homeland security, as well as efforts to modernize the Commission.

Karen S. Evans is serving as the National Director for the US Cyber Challenge (USCC). The USCC is the nationwide talent search and skills development program focused specifically on the cyber workforce. She is also an independent consultant in the areas of leadership, management and the strategic use of information technology.

Tony Summerlin is the Senior Strategic Advisor at Federal Communications Commission (FCC). He served as the senior advisor to the CIO of the United States Government for 7 years. Tony is three time winner of the Federal 100 Award for significant contributions made by a private sector employee assisting in the achievement of the President’s Management Agenda.

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Disruption and Resiliency: Lessons from 9/11

Michael Krigsman:

Welcome to Episode 192 of CXOTalk. I’m Michael Krigsman, and CXOTalk brings together the most innovative people in the world who are focused on digital disruption, digital transformation, and the impact of technology on organizations and on society. Today’s show is really a special one. We’re talking about the impact of the events of September 11, 2001 on our notions of disruption, our notions of organizational resiliency and leadership. And, we actually have three guests today. And let’s start off and I’ll ask them to introduce themselves in turn. David Bray is the CIO for the Federal Communications Commission. David, how are you?

David Bray:

I’m great! How are you, Michael?

Michael Krigsman:

I am excellent! So David, tell us what you do.

David Bray:

Sure. So, right now I’m the Senior Executive and Chief Information Officer at the Federal Communications Commission. Fifteen years ago, I had signed up for a little-known program called the Bioterrorism Preparedness Response program at the Centers for Disease Control in Atlanta, Georgia, and was actually supposed to brief the CIA and FBI on September 11, 2001, on what we would do if a bioterrorism event was to happen. So, obviously a lot of memories there. I will be interested in talking about both about what happened and what was supposed to happen after all of that.

Michael Krigsman:

Fantastic! And then, at FCC Headquarters, we have Karen Evans and Tony Summerlin. Tony, please. Welcome to CXOTalk, this is your first time. Give us a brief introduction about yourself.

Tony Summerlin:

I’m Tony Summerlin, I work for Dr. Bray here at the FCC. I’ve been here as long as David has, three years, but I’ve worked in and out of government for 30 years, luckily not all of it, just a small part of it. And, I’m leading the modernization efforts on David’s behalf here at the FCC.

Michael Krigsman:

And Tony, rumor has it that across the government, when people think about IT and the CIO role, that they look to you. That’s the rumor I heard.

Tony Summerlin:

Well Karen can probably say a lot to that, since I supported her in the White House for seven years, but I’m the disposable object that gets moved along to get things done. So I make a lot of contacts, friends, and the other people on a regular basis. (Laughter) When you try to disrupt people, they get very upset, so, I would say it’s probably 50:50 whether someone thinks I’m a positive or not influence, and I like to think I am. But we make a lot of change.

Michael Krigsman:

Well, we’ll definitely talk more about that. And, Karen Evans is the Head of U.S. Cyberchallenge, and really had the first role of U.S. Government CIO, though at that time, it didn’t have the CIO title. So, Karen Evans, welcome! How are you?

Karen Evans:

Oh, I’m great. Thanks for having me back, and I would think based on our title “Disruption and Resiliency”, that that is Tony’s nickname. He is a disruptor and he’s very resilient, so he is the embodiment of what we’re talking about today.

Michael Krigsman:

Alright, so then, let’s begin. Tony, let’s go back to September 11, 2001, and where were you, and what happened and what was the impact on your business and your organization at that time?

Tony Summerlin:

Well, I was actually sitting on a racehorse, exercising a racehorse at the racetrack, and I came back and saw what happened, and rushed back to the office. The world definitely changed. We were in the middle, with Mark Forman, of designing the e-Gov initiatives, which Karen was a huge part of, and trying to change government from the e-Gove perspective, and making government more efficient. And certainly in the face of what happened on 9/11, it added a whole new level of difficulty because people’s focus had changed necessarily away from government and technology, to the security of the American people.

Michael Krigsman:

And, Karen, where were you and what was your situation at that time?

Karen Evans:

So, on that day specifically, I worked for the Office of Justice programs, which is in the Department of Justice and makes federal grants out to state and local governments. The taskforce that Tony’s talking about, I think it’s really key, especially since we’re talking about disruption and resiliency, because that really is what Mark Forman was attempting to do; to use technology to disrupt the federal government services, and make them more resilient.

But, my particular area in that was working government to government and we had one called Disaster Assistance — disaster benefits. But, it was very focused at that point on physical types of things, like hurricanes, storms. And I remember that working group, and even Tony, and the Office of Management and Budget, giving me a hard time because I had spent two years through the Office of Justice programs talking about terrorism, because we had that big incident in Japan. Remember sarin gas on the subway and stuff like that? So I was very focused on that and we had been training the nation on doing things like threat assessments.

And, when that day happened, I was in Washington DC, at the Office of Justice Programs, and all telecommunications went down within a matter of maybe ten minutes of seeing the actual buildings being attacked on CNN. I remember us all watching it on CNN. And then, rumors started flying about what was happening in Washington DC, and then the third plane then hit the Pentagon. And so, I just remember everyone wanting to run out into the streets, and we were like “No, no, no, no!” because that’s what we were trained on, because that’s what the terrorists would want us to do, is to run out onto the street. And what if this isn’t over and they’d take over the subway.

So, it was really trying to figure out, like, you’re really stressed, but trying to provide services at the same time. So, because we were a rebel component within the Department of Justice, we weren’t configured like everyone else. So, ours was the only working email services, working in the entire department. And so we were actually the ones that had to communicate with everybody else outside of the department to be able to mobilize the things that had to happen between the FBI, the White House, the Office of Victims of Crime. And we actually went in to the mode of implementing our plan, because it was happening live.

But, I will tell you on a side note, we were still getting emails from the taskforce group, like Tony and those guys, and because everything was due in! All this stuff was due in! They were still sending us notes, and I sent notes back. And I remember sending one note back saying, “OK, now it has happened, and I’m redoing the paper because in a matter of hours, you have to provide  a response about what should the White House do as a result of this terrorist attack.”

Tony Summerlin:

That’s right.

Michael Krigsman:

And, David Bray. You are, and I should say Dr. David Bray, you are the CIO of the FCC. And, give us your historical note on what happened: Where were you? What were you doing at 9/11, and then we’ll talk about some of the lessons learned.

David Bray:

Sure. So that specific day, September 11, as mentioned, I was actually supposed to give a presentation at nine o’clock to the CIA and the FBI as to what we would do technology-wise if a bioterrorism event happened. And actually leading up to that, for those who remember, in March 2001, the Agile Manifesto had come out, which was encouraging Agile development versus Waterfall development way back in 2001. And I was an early proponent of that, because we had to get things out as quickly as possible, even before 9/11. And I was told to get back in my box: follow the five-year enterprise plan; follow the five-year enterprise budget strategy. In fact, I was a bit of a heretic, sort of like Karen as she sort said was a rebel; a rebel constituency within the Department of Justice. I don’t know if I was necessarily mainstream CDC in trying to push for Agile development and rapid prototyping.

But, fortunately we did do some rapid prototyping so that when 9/11 happened, we actually did have technology in place that day. Most of the CDC was sent home from work because we didn’t know if the CDC might be a target. But those of us who were still with the bioterrorism program, we loaded computers in the cars, set up an underground bunker, and then got people up in the air to New York and DC to help with the response, in case there were biological consequences that happened with 9/11.

Michael Krigsman:

And so, for all of you what were some of the key lessons that you learned on that day or subsequently thinking about it in terms of the types of disruptions that hit an organization, and how to think about recovery and then in the longer run, think about resilience?

David Bray:

So I’ll toss out the first one, which is a common theme I think you already heard, which is normally it’s the people that are the potential heretics, or the people that aren’t necessarily in the mainstream of the organization that are usually the ones that are actually getting the organization prepared for a bad day, and they’re not appreciated until the bad day happens. That’s definitely the case of both Karen and Tony, as well as myself. And so, one of the things that I try to do going forward is encourage diversity of thoughts, and if everybody’s thinking the same thing, try to find someone who’s not thinking the same thing because that will actually help increase both cognitive diversity of the organization and of the group, but also make sure that we’re prepared, and looking at things from all angles should a bad day happen.

Michael Krigsman:

So Tony, diversity of thought, that seems like a key attribute in the long run of creating resiliency. Cognitive diversity, David just said.

Tony Summerlin:

Oh, there’s no question. I mean, the diversity of thinking and that’s one of the things we learned as Karen pointed out and we learned in a big way, during the e-Gov initiative, if we hadn’t had those 100 people? Karen Evans: 100 people. 100 people narrowing down to 20-40 e-Gov initiatives, and the diversity of thinking was essential in the way we approached things. And, without that, I don’t think we would have gotten very far. I mean, traditional thinking was only going to give you the traditional answer so, I think that was the genius of putting it together in that form.

But the other parts that work really well is all these people existed in government. Nobody flew them in from the left, west coast, or from overseas somewhere. They all exist in government. So, you didn’t need anybody else to come in and tell them what needed to be done. They all knew it, they needed a platform and an audience and a vehicle to get things done, and the group did extraordinary things. There was no question that what was pushed out during that time, considering this was all being done in the face of a new threat that the United States had never known, was extraordinary. And I think that Mark and especially Karen with her seven years of pushing things forward, if you ever look at what was being pushed forward during that timeframe, it was pretty extraordinary in the face of everything that was going on globally.

Michael Krigsman:

Karen, please. Go ahead.

Karen Evans:

Well, I was going to jump in a little bit about the difference of thought and to build off of what Tony said, and a lot of this this, I think, really comes down to the people who have to keep the trains running. Like if you come out of operations, and you only have to fail once somewhere along the line in your career, and you figure out, you go through every scenario that could possibly happen, so that you can then provide the services. And so that might make you a rebel, like David is saying, thinking about “Waterfall isn’t working. Let’s switch to Agile because this is going to happen.” It’s really, very scenario-based, and if you come out of an operations background, you go through every scenario up to the point of “What if the whole world comes to an end, and the government still exists?” And that scenario-type of things that the federal government employees actually work through. And say, OK, what servers do you need to have should this catastrophic event happen? Because it’s always about what we call “coop and cog” in the federal government, you know. It’s the continuity of operations, it’s the continuity of government.

So, what do you have to do to keep operations going, and then what part of government continues to run? And so we were kind of programmed under coop and cog. What happens within an hour, and what has to happen in 30 days in order to keep the country stable.

Michael Krigsman:

David, this notion of “coop and cog” - this type of scenario planning certainly existed before 9/11 and what changed in the aftermath 9/11 as far as this goes?

David Bray:

Sure. I think what happened was a lot of the cases up until 9/11 - if you were thinking outside the box like Karen and Tony, or myself, it was you were kind of pushed to the side. People were thinking about continuity of operations in the face of a Cold War-like threat. They weren’t thinking about what might be on the horizon, what might be new. I think that’s probably true not just of public service but of any government organization, in that they always expect the future to be like the past but slightly different, when in fact all evidence to the contrary is the future is not at all like the past.

So, if you can remember in 2001, we had ten years of the supposed “Peace Dividend” after the fall of the Berlin Wall, and so people were still, pretty much, if they were thinking about continuity of government, continuity of operations, it was probably nuclear, it probably was thinking about something large-scale and nation-state-backed, and not thinking about sort of a lone individual. Of course then after 9/11 came about ten years of focusing very much on terrorism and not thinking about other things that might not be terrorism-related. It might be natural disaster-related, it might be some other form of disruption. And so I think, as a leader you have to be very cautious about making sure your organization doesn’t fall into the trap of thinking the future is going to be like the past, only slightly different. And you need to help them expand their aperture and say, “OK, well this might happen, but what else might happen that we’re not thinking about yet?”

Michael Krigsman:

Tony Summerlin, you are, for the most part, behind the scenes inside the government running IT with David, working for David inside the FCC, while providing other organizations within the government outside the FCC with advice on how to run their IT operations. So, that’s a case for stability, but at the same time, you’re trying to drive change with the Cloud, trying to drive organization change, and so how do you reconcile the demand for stability on the one hand and the need and the desire for disruptive change, on the other hand?

Tony Summerlin:

Well, I don’t actually run anything, I support things, but with great people that run stuff. But what I try to do is move stuff from what I consider jogging or walking to running. So, what we really have to do is pull the rug out from under people, without using too many analogies. People are very comfortable doing what they’re doing. And, in government, just like in most places, you get rewarded for things running the way they’re supposed to run, and you don’t have the time to look at different ways of doing it. So, you have a fall guy that says “We’re going to stop doing it that way, we’re going to do it this way,” and someone has someone to blame it on, that that’s usually me. Then they’ll move along the path because the only loss is not seeing me anymore, which people are pretty happy with at that point, but it has to be, in this case, especially at the FCC, it has to be dollar for dollar. Everything new we did, had to be funded by cutting something else, so it’s a very painful process. But 50% of the people are OK with it and out of that 50%, maybe 25% actually back it. But when things start coming around and they start seeing successes and nobody’s getting shot, it moves pretty well.

But you have to partner with the best of the best, as in software providers and integrators. I mean, there are people that get up every day to do the best job they can. People don’t get up to do nothing. So you get them all on board with a nice path that has a very clear end goal, and you have leadership like Dr. Bray, who clearly sets what the light looks like at the end of the tunnel, and then it’s easier to bring people along. But, nothing is easy, because there is no reward. I mean, the reward for doing a good thing has usually been quashed unfortunately over the years, so it’s no one’s fault. It just has to be done in a way so that someone else can take the heat. And luckily, our chairman, and Dr. Bray, and our managing director are all willing to take the heat and when it works that way from the top, it’s not really as hard as one might think.

Michael Krigsman:

Well of course, there is that old saying that goes, “No good deed shall go unpunished.”

Tony Summerlin:


David Bray:

I just want to say that you’re hitting the nail on the head, Michael, with the fact that if you want to encourage resiliency, you have to encourage a change in the incentives. As Tony was pointing out, there’s really no reward for taking risk in public service and that’s OK. That just means that those of us who do it, want to do it for something other than some tangible reward. We want to do it to actually make some positive difference in the world or the nation.

Karen Evans:

Well, see, then I would argue that is the reward. And so, when you look at public service, and you look at what is the motivator in how to create an environment where disruption is appreciated. Because you’re talking about, like, how do I bring in new technology? How do I integrate new processes? How do I change things? And that reward is in the long-run, and you may not necessarily be rewarded in the short run, but in the long-run, you’re rewarded because I see a lot of the things that I’ve been pushing really hard for that I got my butt handed to me more times than who knows what, but the nation is doing it now. I mean, there’s the embrace of...I can’t go and… I’ll share this one little thing, this is really...This is kind of funny. I think it’s funny, but my husband says I have a techie sense of humor here...

But, my son just graduated with a public policy degree, and they were talking about the implications of different policies coming out of the White House. And, they actually picked up one of these tech policies, which was mine dealing with IPv6, all this other stuff like that, right? And so…Tony Summerlin: That was a three-year project. That was a three-year project! But, the point is that my son was in the class, and the professor was saying a bunch of different things, and so my son put his hand up and said, “No, that’s not the intent of the policy, and here’s how it works and here’s what…” And he went through this whole process about why the White House does what it does to try to stimulate the economy, to have a market response. And then he goes, “Well how do you know?” And he says, “Well, look at the signature on that policy,” and he looked at it and he said, well, “That’s my mom.” So, he came back and he goes, “I can’t believe the way they’re interpreting these things!” That’s the reward. It’s not the instant gratification that we get from public service, it’s about you’re making a difference and it may not come back to you until ten or fifteen years later. Like, where we are today. It’s fifteen years after September 11 and a lot of the things that I fought really hard, and said needed to get in place, are now in place. And so, there are things that the nation will never know, all the struggles that went on to get them in place, but there’s a resiliency now in the infrastructure.

Michael Krigsman:

We have a very interesting question from a regular listener, Arsalan Khan, who’s asking on Twitter. Are there incentives in place to encourage people in the government to think differently?

David Bray:

So, I would say, sort of what both Karen and Tony were saying, which is 1) the long-term impact — that you do get to see things 10-15 years later that you worked on and then pushed through to get done; 2) it is a responsibility of any good leader to actually try and push things forward. So, I think both what Karen tried to do in her role as federal CIO, my role as FCC CIO, is make sure at least for those people on your team, you are rewarding them even if the larger ecosystem hasn’t taken that on. I do think it’s a larger conversation which is, if public service was designed to be risk averse, partly because the Founders didn’t want it to change overnight, are there parts of it where we need to give more license to taking risk and experimenting.

But it’s partly, I mean, I would say another reward of working in public service is working with people like Tony and Karen. I mean, Tony is one of those wonderful individuals that people don’t normally think of when they think of public service: that he races horses; he races cars; he runs races himself in marathons; he’s fiercely loyal. And, you talked about the balance between stability and disruption. Tony would never take on a stability project, he’d get bored. But, he’s all about disruption. And I think that is one of the sort of untold stories about people who work behind a curtain in public service. You never hear about the people you get to work with, and that I’d say is a great reward itself.

Michael Krigsman:

And we have another question from Twitter. I always like to take the questions from the audience because that is most pressing on their mind. And Chris Petersen is asking, is there a difference between change agents and pushback from political appointees, versus government careerists, versus before and after an election? Anybody want to take that one?

Karen Evans:

So, let me take that one, okay? Because having done them on both sides, being a career person for 25 years and being a political person before I left, and David’s still a career person, I think I should answer that question!

Michael Krigsman:

So, go for it!

Tony Summerlin:

And qualified.

Karen Evans:

And qualified! Yeah. So, there are different ways to lead. And the way to think about this is political leadership has short tenure. And career leadership, if you thought about this as a project or program, they’re working on a program on political leasdership with short milestones along the way, and career leadership is in it for the long-haul, right? So they’re going to the same outcome but one is focused on continuing on regardless of who’s at the top. Now, are there different rewards for what happens in between these guys? In how to do change agents and what are the change agents? I would say it all depends again on communication and leadership. And so there’s a lot of communication, and depending on the leadership style of the political individuals that come in, and the tone set by the President at the top, that drives a lot of things down through political leadership.

But there is this level of career, I call them the “we be’s”, and they are categorized as “We be here when you be gone.” And everybody gets it when you say “the we be’s”. And so, that layer has to really be penetrated, and you have to really, really strive to show them why you want to get to that outcome. And if they buy in, then they are the strongest change agents that you can forever have in a program.

Tony Summerlin:

And these are courageous people and they all exist. And that’s why I love working for people in government. They’re all there. I mean, all you have to do is present the opportunity, and the “we be’s”, I took Mark Forman to meet the CIO when he first came in, and the CIO told him, “Yeah, I think it’s all very interesting, but I can’t do any of it, and I’ll be gone and you’ll still be here so have a nice day.” So, those people exist, but I don’t think it’s the propensity to behave that way, but you have people like Karen and you ‘d have folks from industry come in and tell her “You’ll never get a job for the rest of your life!” Because of the way that she talked to them and the rules that were in. And she was like, “I don’t really care.” And so, it depends on the goal of that individual, whether political or career. If the goal is to go into private industry and be loved. And there are some people like David Whittaker, for example, who was a tremendous careerist who was fantastic in the private sector.

And so, people can stick to their gumption and their notions and do the right thing and get great jobs leaving government. So it’s a tenuous line though. I mean, I’ve watched Karen get her butt kicked a bunch of times by government…

Karen Evans:

And industry! Both!

Michael Krigsman:

Well we have another, and this is very interesting; and by the way I want to mention that there are thousands of people watching us and I want to thank every single person who is watching right now. We are talking about lessons in organizational resiliency learned after the events of 9/11. And we’re speaking with David Bray, who is the Chief Information Officer of the Federal Communications Commission, and Tony Summerlin who is the special adviser at the FCC, and Karen Evans, who runs the U.S. Cyber Challenge and really had the role of the first United States CIO. So we have another question from Arsalan Khan, who asks, is it possible to enlist government contractors to help with the change process? How would you harness the govenrment contractors to help with this? I hear laughter…



Tony Summerlin:

Well, I am a strong believer in harnessing, and we never would have achieved what we were lucky enough to achieve at the FCC without harnessing, that’s a really good word. I mean, I believe in partnering to a very, like, blood brothers extent with our integrators and vendors. And IBM, well, we partnered with the company to move all of our data centers to West Virginia and do everything necessary in the next six months. If you didn’t have a blood relationship, that couldn’t happen. So, the only warning I give to people when they come into the FCC to sell us something or give us something, is we’re really serious. And I learned a lot of this from Karen when she was in the White House and it’s like, “You really want to do that? This is what you have to do to invest to work with us.” And every company. We have nine SaaS products and every single one of those companies are deeply embedded with us. And if we can’t pick up the phone and talk to the top people in the company, and they respond to us, then we just don’t do business with them. It’s not only possible, but it has to happen and Avi Bender is leading an effort now over at Commerce. Karen Evans: Right. That’s a JV effort with industry and I think that has to happen. And I don’t really see that much resistance from industry if you go to the right people.

Karen Evans:

Well, and the other part of this, when you’re looking the portfolio overall. When I was managing the portfolio, it was 71 billion dollars. Seventy one billion dollars. Now it’s at 85 billion dollars. So, when you are talking about what your requirements are, I mean, we’re a good portion of the market. So, you just have to really be clear. I think Dr. Bray is really very clear about what his expectations, what his vision is, what he wants to achieve for the FCC. And when you do that, contractors will respond because they want to be part of success. No one wants to be part of a failure, but I think that you have to be clear about what that outcome is, and you have to share the success with them. And they can’t walk away from you when you’re failing. And that happens a lot. Federal contractors will throw the government agency under the bus, and that’s not right either. And so, you really have to have that shared partnership going for them. And I think David, if you talked a little bit about that clear vision you have, then industry wants to partner with you.

David Bray:

I agree one hundred percent. That’s why I’d use the word, Michael, I’d use the word “public service” because that is first and foremost the public and public-private partnerships, and then government professionals. I think the U.S. is great when we actually have our industry in alignment with what is being done in local communities, and what's in alignment with what's being done in the public sector. And I think sometimes, we end up with industry going in a different direction than what I mean by the public sector and in a different direction than local communities, and that’s where it takes leadership to really bring them all together with a clear vision. And that’s what I think we brought to the FCC and is the secret to our success, aside from having Tony on the inside of the Holy Hand Grenade organization.


Michael Krigsman:

Let’s shift gears slightly and, Tony, I know that you have been very involved in the effort at the FCC, and I’m sure in the federal government more broadly, to move to the Cloud. So, tell us your views of the Cloud, and what is the relation between Cloud and resiliency, and any other perspectives you have on the Cloud.

Tony Summerlin:

The first thing that started this was data center consolidation, which Karen wrote up before the end of the last administration. And unfortunately we have a branch of government that’s supposed to facilitate contracting and so-forth to help that happen and they haven’t helped very much, which is unfortunate. But to skip over and go to Cloud now is a real possibility. So we had to move two of our data centers out of the FCC, necessarily, because number one, I can’t understand why anybody in the world would want a data center in downtown DC in the nuclear zone, and the expense associated with it. But because of accounting rules and so forth in government that I won’t go into, you can’t actually quantify what it costs. So, if you ask somebody what it costs to have your data center on K Street, they say it doesn’t cost anything, it’s included. So, those things need to be put aside.

But if you’re not going to move the data center or consolidate data centers, then at least take a look at the applications you have and if they can be modified so they can be in a Cloud environment, then they should be there. Why? Because ultimate resiliency lies in the Cloud. People say, "Well, I don’t know that the Cloud is safe.” These people are businesses. They stay in business by staying operational. If there’s anyone that’s going to keep a data center running, it’s someone that has a Cloud. So, I think the entire argument about cybersecurity and resiliency is ludicrous. Comparing a data center to a true Cloud environment (another form of data center, but a true Cloud environment), where you’re slicing and dicing applications and you’re slicing and dicing space and storage, is so much more resilient than anything any agency could afford, even DoD. People cannot afford it. As David has pointed out many times, cybersecurity is the ultimate reason. We can’t afford as a small place; the commission can’t buy all the tools necessary to be cybersecure. But cloud infrastructures provide a level of security that otherwise is unavailable. And people provide pipes to the cloud that are absolutely secure. So, I think the argument about whether or not to go to Cloud is silly. Buying applications that are born and bred in the Cloud that are just SaaS applications is the way to go. And if you’re building platforms, you have Azure softlayer, AWS, you have platforms that are Cloud-based to build them on. And you have ultimate resiliency in those environments with access from anywhere. So, it supports working from home; it supports BYOB; it supports any functions you want not to be at the office in Downtown DC or somewhere else.

Karen Evans:

So, I want to bring it back to 9/11 and then fast-forward to Cloud. So, when 9/11 and all of this stuff happened, there was one news service that stayed up through the whole thing, which was CNN. So, we wanted to find out who was actually hosting and provisioning CNN. And it turned out it was Marc Andreessen. Marc Andreessen’s new company. And he always wanted to talk to me.

So, he wanted me to buy provision services. So, if you think about this, this was fifteen years ago, so we’re running a data center. So what we said to him was...So he was actually thinking about Cloud before Cloud was called Cloud, so think about that in 2001. Well the other part of that was, we said, “You know what we’re really interested in? What software were you using to provision as fast as you were provisioning, given how you had to scale up and surge in order not to go down. Would you sell that to us?” So they started thinking about it, repackaged it, and that’s Opsware, that he ended up spinning off, selling out. But he was working on Cloud, so now come fast forward to Cloud.

So Tony’s talking about apps and other stuff. People are looking at it because of the argument. Tony Summerlin: The enablers. The enablers...I’m at the point where you don’t even need a data center anymore. We should even be talking about data center consolidation, it should be data center closure. So if you look at this administration's policy, it actually talks about data center consolidation and closure now. Because, for resiliency and disruption, you want to go. So retooling applications... and now you talk about government contractors and industry responding? There’s technology out there right now that knows that all the organizations, which are prohibiting going to the Cloud as app re-enigineering. So they’re actually coming up with technology so you don’t have to re-engineer your app, you can take advantage of the Cloud, and they’re going to be right in the middle. And to me, I think we’re going to bypass this whole argument about the apps and cybersecurity, and we’re going to buy this one little object-like connector. There’s technology in there and industry is responding to that. And it’s going to be both in private industry as well as public sector. And that’s this disruption that’s going to happen in maybe I’d say in may be 12 months to 18 months. You’re going to see that type of technology come out that’s going to allow us to just fully make use of Cloud.

Michael Krigsman:

So yesterday, on the Oracle earnings call, Larry Ellison made the comment that on-premise is here...The comment he made was “Coexistence will be in place for the next ten years,” between on-premise and the Cloud.

Tony Summerlin:


Karen Evans:


David Bray:

On-premise should be dying, it should be a slow, ideally faster death than some people are predicting, because I think if you’re on-premise, you can’t be fast. I mean, one of the biggest advantages that we got moving to the Cloud at FCC was, if you’d asked us to send a new application in the past, it would have taken six-seven months to do the procurement and get a working prototype. Now, with Software as a Service, we can get a new application prototype working in less than 48 hours. And so, that’s the biggest advantage. So, any organization that tries to do things on-premise, you need to be okay with not being very fast. And as Karen and TOny mentioned, is you do have to have the resiliency. What do you do when there’s a surge? Both a surge because more people want to view things or just because there’s more traffic? Or a surge because there’s a distributed denial of service attack. And so, again I don’t see the value of on-premise. Finally, just the effectiveness, that really get more money focused on development vs. trying to maintain systems, here at the FCC, we were spending 85% of our budget and growing just to maintain our systems. Now it’s less than 50%. So, I would actually say, and it’s not just true for public service, any company looking at how they want to exist in the next year or two, you should be 100% public cloud. I don’t know why you would do anything on premise. Maybe the only thing right now that’s holding you back is you can’t move your existing assets in legacy applications. But that’s when you get to Karen’s point, which is that there are companies that are coming along and will allow you to jump much faster to get off those legacy applications to the Cloud.

Tony Summerlin:

You know, we’re working at the FCC with companies that are willing to take our kit out the building, move it to their Cloud environment, and start translating the app, and all as part of a service. So, it moves away, but the whole roadmap is based on the fact that they’re going to be rewritng and moving the apps. The whole problem with old legacy systems in the Cloud, evne if you do the translations necessary, is that costs are extraordinary. Yet when Tony Scott gave a speech and someone challenged him on the cost differences, it’s not about cost, it’s about agility and resiliency. You’ll never get them in your data center.

Michael Krigsman:

Ok. So, we have just a couple of minutes left. And, this has been a very interesting discussion of the Cloud. But, why don’t we, in our last few minutes, just go around the virtual room, as it were, and each of your final, parting thoughts on retaining resiliency and the role of leadership in that. So David, shal we start with you?

David Bray:

Sure. So one thing I want to say real quick on the Cloud conversation. I would love to see a virtual conversation between Marc Benioff of Salesforce and Larry Ellison. That would be a fun Cloud vs. on-premises discussion that I would love to pay money to see. Because I think that they definitely have strong views.

On closing thoughts, the one closing thought I would leave is it takes leadership that will help create incentives for your team to act differently, to lead differently, to think differently, and to encourage risk takers to look outside the box and say, "Well, every day right now looks like we’re being okay, and what are we thinking about in the future that may be a disruption like a 9/11-like event, or maybe just a disruption because the marketplace might change, or a customer base might change." We might have a disruption of that sort, and that’s where you want to have people thinking differently. Specifically for public service, I think we really need to have a strong conversation that brings together Congress, that brings the executive branch, and the public sector, that brings together industry, the private sector, and communities. Because right now, there are things such as encryption debates such as debates about bio and things like that, where we’re really going in different directions. But I think at the end of the day, we all want to see the same thing, which is a safe, secure, free, and private well-being of the United States and this world. So can we have a conversation about how we can continue to be resilient, in an era in which technology is moving forward exponentially.

Michael Krigsman:

Fantastic. Karen Evans, your final thoughts quickly on resiliency and leadership.

Karen Evans:

I think if you want to have true resiliency, it requires leadership, and the adoption of disruptive technology and innovation. Because everything David’s talked about in the innovation of thinking, needs leadership to allow it to be embraced in the organization.

Michael Krigsman:

Ok. Tony Summerlin, you get the last word.

Tony Summerlin:

Our chairman is a courageous guy, when we moved our data center and because we went offline, they tried to attack him on the Hill and he said “I absolutely refuse to apologize. It was what had to be done and it’s the right thing to do.” There are pain points. There are pain points, but it has to happen and unplugging people is always unpleasant, but there are plenty of technologists out there to help, and I think there are plenty of people in government and elsewhere that have their heart and soul to make  a change. You know, the incentive should be the outcome. I don’t think these pay things or anything like that will help, and I think the what government has to do in particular, is not provide disincentives. And, other than that, just letting people move forward with their thinking. I’m a consultant. Most places I go people already know what they need, they just need somebody to tell it.

Michael Krigsman:

Ok. So giving people the freedom to solve the problems in the right way. So, you’re a positive person, a very positive person aren’t you? You’re an optimist.

Tony Summerlin:

Me? I am! I wake up every day totally paranoid but very optimistic.

David Bray:

He’s a disruptive optimist.

Michael Krigsman:

I like that. A disruptive optimist. And, on that note, it is time to end this very interesting conversation, and it just flew by, and I’d like to thank the thousands of people who watched this show today, and special thanks to our guests. You have been watching Episode 192 of CXOTalk, and today we have been speaking to David Bray, who is the Chief Information Officer of the Federal Communications Commission, Tony Summerlin who is special adviser at the FCC, and Karen Evans, who is the leader of the U.S. Cyber Challenge and who was, in fact, the first person in the CIO role for the United States federal government, ever. What an awesome show. And I also really want to thank Livestream, because the Livestream folks really provide our video infrastructure and they just help make CXOTalk possible. So thank you to Livestream and thank you to everybody, and we’ll see you next time.