Is CIO the new route to chief executive’s suite?

The importance of data and “just-in-time” decision-making may mean the background of CEOs could change. Image sourced from www.shutterstock.com

Some may wonder whether the appointment of Richard Umbers to the role of Chief executive of retail group Myer, is a one-off. Before his elevation, Umbers was the group’s Chief Information Officer, a role not usually associated with a straight-line route to the CEO’s office.

According to the UK FTSE, approximately half the CEOs appointed in 2012 and 2013 had a finance background. In the United States, 25% of those appointed as CEOs of the largest listed companies in the USA were once CFOs.

Some Boards look for CEOs who understand the needs and wants of their customers; others want CEOs who are skilled at managing resources (people and money); and others look for a CEO who can grow the company. Traditionally candidates only needed to excel at one of these to be chosen as CEO, but had a better chance of being selected if they excelled at two. Only a few had the knowledge or breadth to tick all three boxes.

Based on the growing importance of information and “just-in-time” decision-making, I think we will see even more CIOs being promoted to CEO of major corporations in the future. Here’s why.

Traditionally, the CIO reported to the CFO who had access to financial data about all aspects of the business. CFOs knew more about the top and bottom line than anyone else. They understood how to manage the balance sheet, and they were often seen as a good counter-balance to the visionary CEO. Some boards believed the CFO’s numbers-driven, analytic reports of “reality” more than the brilliant CEO who was in love with the company’s products or the silver-tongued salesman who could “sell ice to the eskimos”.

But now, the CIO is emerging as a very real alternative path to the CEO position. Technology has become ubiquitous across all facets of the business, from the supply-chain management systems and back-of-house software to the customer-facing web and mobile platforms. Those who are managing these transformational projects have gained a comprehensive insight into how the business functions and how each function inter-relates. Next to the CEO, the CIO is the executive most likely to have a bird’s eye view of what is going on in the organisation.

Digital disruption has changed the game of business. We live in an increasingly data-driven world. Those who understand which technology will generate what kind of data, from whom, at what intervals - and know how to glean data driven insights, in real time, about all aspects of the business - will have an increasingly important role to play in large corporations. And at the moment they are in short supply.

Richard Umbers is an executive who understands all this. He has held general management positions at Aldi, StarTrack and Australia Post, and was responsible for customer engagement at Woolworths. Every shopper at Myer can see that he has used technology to make it a more efficient and effective retailer. Customer information collected at the point of sale enables executives to get immediate insights about everything from product sales to customers’ changing buying habits, to supply chain hiccups and much more.

No doubt Umbers understands how to mine that data for even more insights. His tech-savvy skillset, combined with his past management experience, suggest that he’ll do well as CEO of an organisation such as Myer.

It’s the age of big data, and CIOs are in a position to access, process and understand the data that reveals what’s happening in the business, what’s likely to happen in the future, and what trends are impacting the business. Learning from the past, managing the current, and crafting the right strategy for the future has become a high priority for leaders of companies that want to grow.

[Peter High, consultant and author of an article in Forbes.com], World Class IT: Why Businesses Succeed When IT Triumphs identified some common qualities of CIOs who’ve moved into CEO roles:

  • They focus first on what and how to add value to the business; technology comes second
  • Most worked in other business disciplines prior to taking on the CIO role
  • Many work within organisations that promote from within
  • A majority have an MBA or advanced degree in a business discipline
  • Many have spent time as consultants, hence have broad experience with many kinds of companies impacted by digital disruption.

I have worked closely with scores of CEOs, helping them develop their growth strategies and change their roles as the company moves through rapid growth and into continuous growth. As a company grows and faces new challenges in the market, executives who learn how to manage digital disruption and change, to use data to enable them to operate at the speed of growth will succeed. Those who don’t will stunt their company’s growth.