Dr. Pankaj Setia on the challenges that will redefine CIOs’ careers

Dr Setia, also the chairperson of the centre for digital transformation at the business school, teaches graduate-level courses on the leadership of digital organizations, strategic management of digital innovations, and digital transformation. He has previously taught for many years at Michigan State University and the University of Arkansas in the US.

According to Dr Setia, as digital strategy and models are becoming crucial for an organization’s survival and growth, the boundaries between IT and business leadership are also getting blurred. He feels “in these present contexts, CIOs must reflect on their role deeply because, going forward, they may have to provide vision, guidance, strategies, foresight, and entrepreneurial energy to the enterprise.”

In a conversation with CIO.com, Dr Setia throws more light on the challenges and opportunities that lie ahead of IT leaders.

Inadequate budgets, silos, and the fear of taking risks are the biggest roadblocks for going digital. How should CIOs tackle each of these to ensure smooth and effective digital transformation?

Dr Setia: Indeed, these are three crucial challenges that CIOs must overcome. First, a risk-averse culture may be addressed through a two-pronged approach. First, CIOs must champion training and engagement of employees, to create a digital mindset and enhance understanding of the digital transformation being undertaken. It is imperative that the employees are excited about the transformation. Over the last few years, I have been engaged in teaching and training them, and I have seen remarkable shifts in the mindset of employees and executives alike, including doctors, civil servants, engineers, C-suite executives, and other top management team members. A second step for CIOs is to work toward getting buy-in from top management. For CIOs to get desired results, the board and top management team (TMT) must actively champion digital transformation initiatives. Many examples from the corporate world underline the role of top leadership in engaging and motivating employee teams.

Second, overcoming the barriers due to siloed strategy is a complex endeavor. It is not always easy to overcome these, as professional management relies on specialization in a functional domain (e.g., marketing, finance, human resources, etc.). However, because digital transformation inherently spans functional domains, siloed strategies — that emphasize super specialization — are not optimal. Therefore, CIOs should look to create cross-functional teams. They should also think about innovative project-based (or product-based) management approaches, where appropriate. To achieve project (or product) goals, these approaches incentivize managers to act collectively. The championing by TMT is again crucial in these endeavors.

Third, overcoming the problem of insufficient budgets requires the CIO to communicate effectively with the top management team (TMT). Devise an appropriate communication strategy that includes present value assessment. This will enable the TMT to accurately assess the initiatives’ risks and rewards. Clear, objective, intelligent, and frequent communication is crucial to get the buy-in from top management related to crucial budgeting decisions.

Digital transformation is a multi-year journey but the pressure to deliver immediate results can often lead to shortsighted decisions, undermining the long-term success of the initiative. How can CIOs balance short-term goals with long-term objectives?

Dr Setia: Indeed, long timeframes of digital transformation are a reality in many cases. CIOs may focus on two parallel approaches, to enable self and organisation to make correct decisions. First, they should think about using a portfolio approach. CIOs may manage transformational initiatives as a portfolio, methodically categorizing different projects that differ in gestation periods. That is, they may identify initiatives into short-term and longer-term deliverables and manage these using a portfolio methodology. Second, CIOs must focus upon the ‘present value’ of initiatives. And, even more importantly, CIOs should avoid a myopic view regarding long-term transformation initiatives, which may adversely influence decision-making for these initiatives. CIOs should communicate the same to the top management team. As the value of these initiatives is realized only in the long term, it is very natural for everyone else around to not appreciate the value of the future outcomes. Insights into the future possessed by the CIO and team may not be widely known or appreciated. Therefore, CIO may communicate the present value to appraise the organizational stakeholders.

The current economic landscape is again forcing CIOs to support top-line growth initiatives at a time when they are also being asked to reduce ongoing operational costs. In such a scenario, what’s the way forward for an IT leader?

Dr Setia: I see this as a great opportunity for most CIOs. The many CIOs I have taught in the past have expressed an interest to grow into successful business leaders. The boundaries between IT and business leadership are also getting blurred, as digital strategy and models are crucial for an organisation’s survival and growth. In these present contexts, the CIOs must reflect on their role deeply. Wearing a business leader’s hat, CIOs have a great vantage point to think about top-line growth through digital leadership. However, this requires CIOs to reflect on ways to evolve into true IT business leaders. CIOs may successfully evolve into one by thinking about some of the things we discuss here: challenges and opportunities in the present environment, a systemic evaluation of the initiatives, keeping in mind the business environment and goals, and using a portfolio approach. 

What do you think are the top three challenges confronting enterprise technology leaders today, and how can CIOs overcome these challenges?

Dr Setia: The biggest challenge for CIOs, going forward, will be related to developing and enacting digital strategies and business models. Many significant changes are likely to happen in the regulatory environment, customers, and technologies. As new competitors arrive on the block, a CIO will have to continually think about ways to guide the organisation to grow. Second, a CIO will have to continually think about new and emergent technologies and discern their importance for the organisation. For instance, artificial intelligence is one such technology that may continue to challenge CIOs to think about ways to assimilate it within the organisation. Finally, cybersecurity will continue to be a challenge for many organisations, as the external world continues to pose challenges, many times through a combination of state and non-state agencies, often in rogue states. While the three —formulating digital strategies, assimilating emerging technologies with the organisation, and cybersecurity — may seem like challenges, these offer tremendous oppportunities for those CIOs that can find the managerial mantras to overcome them.

What top three enterprise technology trends do you see emerging over the next two-three years? How should CIOs make the most of these trends?

Dr Setia: There are many exciting things happening right now that are likely to emerge as big trends. First, AI-based (e.g., generative AI) transformations are likely to emerge in new and innovative ways. Organizations have already started to think about ways to transform themselves using AI, and a focus on analytics-based decision-making will likely emerge as an even stronger trend across industries. However, assimilating AI will likely not be an easy journey for many organizations, as it is fraught with many complexities and pitfalls. Second, a related trend is increasing focus on robotic process automation. Many organizations are going to increase their focus on the automation of manual and pre-determined work activities. Finally, customer engagement through digital technologies is likely to emerge as a defining trend. I foresee this trend will be strong for many years, as customers will occupy an even more central role in many organizations’ digital transformations. This is a very promising opportunity for enterprises and many will build advanced digital customer service capabilities, to become leaders in their domains.

In what ways is the role of a CIO changing? How would the new CIO role look like? 

Dr Setia: IT is now a key driver of an organization’s business strategy. In fact, this is in line with the global headwinds. I am engaged as a co-chair with the IT Leadership Panel at the leading academic conference of information system (IS) academics across the world. There is a clear recognition and consensus that the CIO role is being transformed in this community. So, CIOs will have to rethink their role and reflect on ways to become IT business leaders. In this role, CIOs may have to provide vision, guidance, strategies, foresight, and entrepreneurial energy to the enterprise. As CIOs grow into such leaders, it will be a great opportunity for many to demonstrate their potential, as they shape a new world and India. My best wishes to all taking this journey.