Corporate innovation can occur in many organizational places apart from technology. Garry Ridge, the CEO of WD-40 Company, the manufacturer and marketer of popular WD-40 lubricant, devised innovative leadership and innovative marketing programs to transform a venerable U.S. household brand into a global entity.  When Ridge became CEO of WD-40 Company in 1996, the company had become stagnant marketing one product - WD-40. In fact, the company needed more than its own lubricant to move out of its stuck gears. A strong global marketing vision, a profound concern for constituents, including employees, a desire to outsource, a well-thought out corporate strategy, and an attitude that people have learning moments rather than failures all helped Ridge succeed.  In 2009, Ridge collaborated with Ken Blanchard, the best-selling management book author, to write Helping People Win at Work:  A Business Philosophy Called "Don't Mark My Paper, Help Me Get An A." The book profiles many of the innovative leadership principles Ridge pioneered at WD-40 Company.

Enterpriseleadership.org sat down with Ridge to learn how he turned a one-brand U.S. company into a well-oiled global marketing and sales machine offering a variety of industrial and household lubricants and cleaning products. Here is what he said:

EL. What challenges did you face when you become CEO of WD-40 Company?

GR. Being the CEO of a company these days has to be something you really want to do, whether you are selling Apple computers or WD- 40. The responsibilities and the depth of the needs differ greatly today than last year or 10 years ago, especially with the changes in regulations. On the WD 40 side, we had a company conditioned to do the same thing for 40 years. Every time the company woke up every day, it sold the only product it had - WD-40. The culture and the operating style had to change. We said that we had to wake up one day and do things other than WD-40. That became a major challenge. The transformation consisted on going from silos of knowledge to what I call fields of learning. Everyone knew most everything about what we did. To bring in new ideas and ways of doing things, the culture needed to change so we could challenge ourselves to become competent in a few new areas. Changing a corporate culture is not easy to do. You are dealing with the most precious and the most complicated thing in the world -- people.

EL. How did you begin the transformation?

GR. Back in the early 1990s, I went to a national retailing association seminar where I heard the vice chair of Wal-Mart speak. He said that if you want to survive tomorrow, you have to separate it from today. That statement stuck in my head for several years. Because we had never done anything like this before, we formed a group of people who would just focus on future revenues. We started with our research and development group, which we called Team Tomorrow.  I selected one of our long-standing executives who thought globally and had a marketing background as the Team Tomorrow leader. We set this organization on this track. We gave them a goal to create $100 million worth of incremental revenue within a specific period. We wound up beating that goal. After the fifth year, the team generated $165 million worth of incremental revenues.

EL. How did you begin to drive innovation and conquer additional global markets? 

GR. We had a three-prong strategy. Our first goal was to expand our distribution globally. Today we sell more WD-40 outside the U.S. than we do in the U.S. That is a robust growth area for us. We said what geographic opportunities look good and how we should attack them. We set up an operation in Europe. Our operation there today is larger than what the entire company was back in the mid 1990s. It is in excess of $100 million in revenue and has had an annual compounded growth rate of about 19 percent for the last five years. We opened an operation in Malaysia to manage our Asian operation. Recently we opened a subsidiary in mainland China.

Next, we wanted to expand by brand. We looked for some strategic acquisitions. We acquired four brands over a period of five years. Then we said, 'What sort of business do we want to be in?' We had an obvious answer to this question, 'We are going to be in the squeaks, smell, and dirt business where we get rid of squeaks, smells, and dirt. We can to do it with products that deliver exceptional performance at extremely good value.' Where we have the right to play is where we have our greatest strength.

Last, we wanted to expand our trade channels by selling WD-40 in multiple trade channels. You can now get it in hardware stores, grocery stores, home and industrial stores, and sporting goods stores. Most products limit themselves to one trade channel.

Based on the strategic analysis of our organizational strength, we looked at what products, brands, or extensions of those brands could help us to derive more revenue. As a result, we expanded into the 3-IN-ONE brand, which was one of our acquisitions. We extended that from regular drip oil into a full range of multi-purpose maintenance products. We took that to the world. We are in the middle of further expansion in the new brand called BLUE WORKS. It is an industrial high-end range from the WD-40.

EL. What is your revenue like right now?

GR. For fiscal 2008, we did more than $300 million. Revenue for fiscal 2009 was slightly less than $300 million. On a consistent currency basis, we would up marginally on last year right now. With the strengthening of the U.S. dollar against the pound, we have lost about $30 million internationally by translation only. Last year we had translated European business into the U.S. at $2 per pound. It has been as low as $1.40 per pound. It just disappears; you cannot do anything about it.

EL. What kind of investments did you have to make in technology to develop new products?

GR. We invest between $3.5 million to $4 million a year in our Team Tomorrow, which is now our research and development area. We outsource much of the functions of the research and development. I jokingly say that we have the most up-to-date research lab in the country because we go out and rent what we want on a daily basis. We do not have a building full of scientists. Instead, we have many scientific partners. We will ask them to help us develop this product. We manage the process more than do the work. Outsourcing for us has been economically feasible because we always have access to the latest technology. If we had to maintain our own Web site, we would need to update it daily. We can do go out to the most modern places and ask the brightest in the world to help us.

EL. Did the transformation change your governance, and strategy development and execution?

GR. Yes. We became more inclusive with our people. We say that we do not make mistakes. Instead, we have learning moments. A learning moment is a positive or negative outcome of any situation. In fact, the learning moment has been the backbone of the change that we had.  I have a Web site called the LearningMoment.net, which has much of our philosophy on it.

EL. Did you dabble in analytics for sales, marketing, and distribution?

GR. All of the time! It is part of our determining where we have the right to win and the right to play. We look at trends within categories, where markets tend to move, and what trade channels deliver more than other channels. We also look at if our consumers move from where they shop. We look at that globally because it changes in every country of the world. The analytical database and information base in China will differ from that of the U.S. Most of our business in China goes into more industrial and manufacturing. In the U.S., our business consists mostly of household and home consumption. We certainly look at these leading indicators of where business is moving.

EL. Can you share an anecdote about the challenge of marketing WD-40 globally, such as in China?

GR. We tend to do grassroots marketing. For example, several years, I had a booth at a Chinese trade show where we sampled our product to Chinese industrial factory workers. No one paid attention to me because my Chinese description of WD-40 translated to lubricant. I asked myself, 'Why don't these people want a lubricant?' I could not help noticing the line of people picking up empty paper bags at the Toyota stand. I quickly realized that these people could use the bag to bring home rice from a store. To them, lubricant meant dirty diesel oil, which they did not need. Based on our additional research, we changed our message to pitch WD-40 as an anti-rust lubricant. They could easily relate to rust. Within minutes, we had security guards on our stands stopping people from destroying it. People were in a frenzy to get the product. This example became a learning moment. You need be awake enough to understand if there is a need, and you identify that need in the market correctly.

EL. Can you describe the research you do to make sure you have the right product technology? Do you leave that to your outsourced partners?

GR. We do all of that. It starts with the end users. Our research consists of following our end users around. We do focus groups. We do broad-based Internet concept studies. We use all of these tools. We had a company called Edison Nation go out and ask end users to suggest new products and uses for WD 40. We use as much about the customer or about the user information as we can. Then we take that into concept testing. We have used all of the tools that are available from time to time.

EL. Are you doing anything with social media such as Procter & Gamble?

GR. Yes. We just set up a program where we put out a social media page. It asks people to share with us their money-saving tips for using our products.
Before social media became commonplace, we formed the WD-40 Fan club. In 2000, we went to our end users and we ran a competition. We wanted to know their favorite use for WD-40. In the U.S., we got 400,000 entries. We distilled that down to the top 2,000 uses. At last count, the WD-40 fan club has 135,000 active members. They interact through out Web site. We feed them user information, such as tips about WD 40. We reach out to them for research.

EL. To go global what changes did you make to your supply chain?

GR. Globally we mirrored what we did anywhere else in the world. We outsource all of our manufacturing except for the manufacturing of the secret formula for WD-40, which we control very tightly. We found good quality aerosol canners and liquid fillers all around the world. We pay attention to quality. We verify and approve all of our outsourced partners. We look at their capabilities and capacities.

EL. Because WD-40 is such a popular brand, was it hard to introduce other brands?

GR. Yes, that gets back to my statement about this not being an easy company to change. Because the thinking was around one thing, we needed to develop things such as learning moments. We also needed to pay much attention to vision and values that drive our behaviors. We invest so much in the development of our people and education and learning. We are a living learning laboratory here. The biggest barrier to any thing in life is fear. It comes out of people being afraid to make mistakes.

EL. Did management have to go through a transition to change this company around?

GR. Fortunately, since we started this program, we have had some impressive retention numbers here. We look at ourselves more as a tribe rather than a team. Nobody has the right to get in the way of people doing magnificent work. I challenged our management team to rally to this thinking. It is their job to make their people successful. We focus on that. In the book, we took at our entire process of coaching, mentoring, and enabling people. Today, many middle management people in the backroom make the decisions that drive how the day-to-day organization functions. We need to include these people in the issues and ask them to help management solve problems. People at the helm should not be afraid to say, 'I don't know.' I say this all of the time. That is why I surround myself with smart people.

EL. How do people articulate the value they provide to the company?

GR. It gets down to a giving people the feeling of doing meaningful work. At WD-40, we say we are in the memories business. We strive to create positive lasting memories with our customers, our end users, our employees, people, our shareholders, and our partners.

Elizabeth Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

What does the Apple's computer mouse, Oral-B toothbrush for children and Palm V handheld organizer have in common with each other?  Each company designed its respective product with the help of engineers from IDEO, one of the most recognized global design firms.  Since 1991, IDEO has helped to design more than 3,000 new products and to reinvent many established Fortune 500 companies.

IDEO's name has become synonymous with innovation. BusinessWeek has ranked IDEO in the top 25 most innovative companies in the U.S. Meanwhile, The Wall Street Journal dubbed IDEO's office, Imagination Playground. The company has become the subject of two books: The Art of Innovation and The Ten Faces of Innovation.

Collaboration among IDEO's clients and myriad of engineers who specialize in discipline ranging from human factors to interaction designs has played a critical factor in the company's success. Doug Solomon, IDEO chief technology officer says, "Because we are not content experts about the thing the clients come to us about, we need to learn from them and their colleagues, and them share this information with our colleagues." In fact, Solomon and his design team devised a collaboration platform, called the Tube, to improve the cross-pollination of ideas across global constituencies.  Employees generated more than 1,000 pages six months after the Tube went live.

Enterpriseleadership.org sat down with Solomon to discuss what design considerations that went into the Tube and what CIOs can learn from them.

EL. What challenges did you face in designing a collaboration platform for a company such as IDEO?

DS. We have employees in eight offices on three continents. In the past, we worked in a distributed manner locally with our colleagues. We might have five or six people meeting face-to-face to discuss a project. Now our global clients expect us to collaborate around the world. We had the challenge of scaling our local work process to how best to collaborate across all of these time zones.

Experiencing something works best when it comes to innovation. As a result, we like to take our clients on observations in the field, such as on shopping visits, or looking at analogous kind of problems and other companies in the ecosystems. We had to find ways to make it easy and convenient for our clients to be part of the process without having them be physical with us the entire time.

We also work with people in the ecosystem who might be affected by some product or service or idea we work on. We use an anthropological type of methodology where we do more than interview them. In fact, we might live with them, go to work with them, or go shopping with them.  Since our projects are so diverse, we never know in advance what kinds of interests and people we want to speak with.

EL. How did apply your experience as an innovation company to the design of your collaboration platform?

DS. We treated ourselves as if we were a client of IDEO. We used our human senses design techniques and methods to observe our environment. We talked to people to understand how they would like to collaboration, but felt it is difficult to do at this point. We looked at the culture within IDEO to understand what would motivate people to share what they knew. We looked at what kinds of technologies we could experiment with and use for system prototypes. We also looked at our business constraints to make sure we could support this initiative.

EL. Can you summarize the concept of the Tube?

DS. We designed the Tube, which is our Intranet, based on the London subway system. It connects all of the people around the company, and provides them with a way to share information with each other. Some parts of our Tube consist of homemade components. We designed a consistent, human interface based on Ruby on Rails and other Web 2.0 technologies. It pulls in information from many of our legacy information systems, such as project management and time cards. We also have third-party tools we have built in. For example a screen sharing tool makes it easier for anyone here to make a presentation to a client or a colleague in another office. You just click on a link and you automatically you will have your screen starting to share with whomever you would like to invite.

EL. What are the various page types that one has available via the Tube?

DS. Our system is built around a number of page types, such as people pages similar to Facebook.  Active Directory pulls in a person's official data, such as phone number, to create the page. People can also describe themselves in anyway they like to pull their official biography. They can turn their bio into a PDF document, click on a link, and mail the bio to a client. We have project pages that have a start date and an end date. If someone enters a new project, then the system will pull in all of the people who have ever worked on that project. The information will include their bios, photos, and email address.  Our digital assets pages pull in all of the different rich media, such as videos, PowerPoint presentations, images, or documents of any sort.

EL. What tagging capabilities do you have in the Tube?

DS. We also have tagging built throughout the system. You can tag every kind of object, such as rich media. You can search on the tags, on the people, and the digital assets. You can easily search them across our entire system. All of these associations are noted. You can easily find who you should talk to about something, in addition to reading about it. We call this feature our knowledge sharing rather than knowledge management.

The data feeds pull in feeds from external sources, such as blogs. You can even push out internal information, provided it is not proprietary, to external blogs. We have very little top down control of the information. Users generate everything except for a very small piece of our home page. Here our internal communication groups tell what is going on within the company. Each project page lists what information you can share with the public and which information must stay in-house.

EL. Do you have separate pages for clients?

DS. We have a page for each client that aggregates all of the projects that we have done for that client. You can easily look and see what we have done in the past. You can even see information about discussions we had had with the client. These pages help us with business development activities.

EL. How are you handling blogs and wikis?

DS. We are on our fifth Wiki system at IDEO. It is simple to use and does much of the work most wikis ask people to do, such as create the navigation. We have more than 15,000 wiki pages. They are the first place where people want to go and to collaborate with their team members around projects and personal interests.

We give everyone a blog when they join the company. They can decide whether or not to use it. We also have many group blogs. We get 100s of postings per month to the blogs. The ethnographic research about ourselves that we learned as an email culture has helped to make our blogs popular. In the past, we have had different types of blog systems. In fact, our blogs went through a cycle of ups and downs. Some people would blogging and then stopped because no one was reading the entries. People would stop looking for the blog. We built a small tool called Feedmail which watches the blog for you. Initially, we subscribe you to all of the blogs. You can unsubscribe to the blogs and custom which ones to watch. Each day it generates a HTML email with the images and a short summary of what is in the blog posting for that day. You can click through and read the entire posting or skim the blogs. In a minute you can see what's new on all of the blogs and decide what you want to read. That is where much of the content of projects comes from.

EL.  Is there email within your collaboration system?

DS. You just click on a link within the system and it opens your email...it is integrated with our email.

EL. Do you made any provision to use the Tube as a repository for company documents?

DS. We have also a tools section within the Tube that allows us to post a variety of different tools, everything from HR forms, such as health benefits and time cards, and screen sharing tools.

EL. How often do you update the Tube?

DS. Our internal development team pushes out a new version of the Tube weekly. Each new version contains bug fixes and new features.

EL. How would the Tube help me to facilitate putting a project team together?

DS. The Tube can help you look at what manpower resources are available to work on a project. If you use a combination of data from our enterprise management system and our time card system, you can see the kind of people who are available for a project within your time frame.

EL. Have you opened up a section of the Tube to your clients and do you plan to expand it?

DS. Yes, already have a custom section of the Tube opened to our clients. They cannot get confidential information about other clients. They, however, can get access to any work that is happening on their project, such as status reports. In fact, we give them access to all of their information in one place. They don't have to search through their email to find the last update on a project or a report that IDEO showed at a presentation.  It allows us to have a very direct link with our clients and share with them the work that is in progress, such as drawings, illustrations, or storyboards. We can even share videos people we interviewed to get information about the project.  Many clients like this way of interacting, but some clients prefer a more conservative way of sharing information, such as email.  The majority of projects with our clients include some external Web-based tool for collaboration.

EL. What can CIOs learn from you folks about collaboration?

DS. Like many companies, when we started looking at collaboration, we first looked at the technology piece, especially the dozens of existing tools. Of course, we wanted to see if we could find something that could meet our needs.  We experimented with all of the Web 2.0 tools such as blogs and wikis, social networking sites, telepresence, and video; conferencing. The more we spoke with other consulting companies about their collaboration tools, such as McKinsey & Company, we found the reason why most of these systems do not  meet the expectations of those who buy them. It does not have to do much with the technology as it does with the social network within an organization that wants to drive more collaboration. You need to understand the organization's culture. What are the rules around collaboration?  Do we really encourage it or discourage? Many companies do not look at the motivations that would really provide some benefit for people to collaborate. Unless it really meets some needs people have, you understand those needs and their rewards, then it turn into a system that people will not use.

You also need to understand the kinds of concepts you want to share. People carry around much passive, not explicit, knowledge of things. That explains why we decided to create links between people. This proved to be a better alternative than creating a knowledge management to suck information out of peoples' heads, put it in a database, and then download it in their heads.

So, the trick consisted of finding the intersection between what motivates people and what is important to the organization. People need to get some benefit from collaborating with the system. Most benefits will vary company by company. It takes a custom system to provide that kind of motivation. People at IDEO really want to express their interests, to share their work, and to be known to other people in the organization. We never told people they must use the system. We designed the system so that it would appeal to people. We then unleashed it, trained people, and watched what happened.

EL. What is the key to designing intuitive interfaces?

DS. Many systems are not designed to be intuitive. We have tried to do things such as eliminate all of the little roadblocks that make it difficult for people to use the system. For example, we made is very similar to use across every part of the Intranet. We use the Active Directory system. You only log on once. You do not need different passwords for blogs or wikis. For example, special wiki language can cause people to stay away from the system. We have a simple editor in our wiki system.

You need to allow people to go where they already are rather forcing them to go to new places. We tried to understand the work processes we have in our collaboration today. We provide ways for people to use the same type of methods but do it in a better more effective. For example, Feedmail brings the blog digest to you via email. Most companies make you go to each blog and search around to find what's new. People waste time searching through dozens of blogs.

We built our system to adapt to changes in the environment. To this end, our collaboration system is a constant work in progress. We always look for new ways to improve it. We have a built in feedback system which people can click on a link and send our team a message. We want to find the functions that people want and overcome any barriers to them using it as fully as possible.

Our innovative process as a company is based on prototype early, and often. We try to get things out as early as possible as we can get feedback from users. We set the expectation that we will need to change things. I recommend that CIOs do that over time.

EL. What has been the payoff from the Tube?

DS. It has helped us to understand how we can improve collaboration and use technology to improve our innovation process. It has also helped us to improve our efficiency and our quality of work. It has helped us to generate more revenue because we have been able to attract new types of project outside of our traditional IDEO community.

Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrrini@yahoo.com.

Why are some major companies good at driving corporate innovation in technology? For some answers to that question, Enterpriseleadership.org turned to Dr. Ron Pierantozzi who built his entire career on driving corporate innovation in a technology-related company and doing research in this area. Before retiring from Air Products, a $10 billion supplier of industrial gases and chemicals, Dr. Pierantozzi was the company's director of business development. He worked on new venture creation and technology transfer. He also served as Air Product's director of technology. Since retiring, Dr. Pierantozzi has been a member of the Radical Innovation Group, a consulting firm that works with global companies to develop their innovation capability. He lectures at the Wharton Business School, and was an executive-in-residence at Rensselaer Polytechnic Institute's Lally School of Business. The holder of 32 U.S. patents, Dr. Pierantozzi co-authored the article, Implementing a Learning Plan to Counter Project Uncertainty, which appeared in Sloan Management Review, January 2008.

Here is what Dr. Ron Pierantozzi had to say:

EL. Can you briefly describe the innovation programs at Air Products?

RP.  We had a couple of different things going on. I worked on the business development team, structured as a separate organization. It reported to the development organization and aligned parallel to the technology organization. We focused on new market entry, new business ventures and new business starts. We also invested in startup businesses to generate new ideas and new technologies. Likewise, the technology organization had teams focused on developing products and bringing them to market. This organization reported to the office of the CTO. It had a number of different processes in place to develop new opportunities.

EL.  Did both of these organizations have people dedicated to innovation and nothing else?

RP.  In the new business development group, we had between six and 14 people whose only job it was to create new business opportunities for the corporation. They looked primarily outside the existing markets and existing capabilities. They looked to emerging markets in technology or market trends with the goal of developing ideas around how to create large business opportunities. I managed that group. It would grow depending on how the opportunities grew. We supplemented our permanent staff with consultants. The technology organization was organized the same. We had a corporate research group whose job it was to create new long-term technology options for the company. It was a corporate entity. The funding did not come directly from the business units.

EL.  Can you describe Air Product's corporate innovation program?

RP.  The education program began with the idea for creating new opportunities in the company. The tool sets we had were not appropriate for innovation. These tool sets focused on building incremental new products or reducing the cost or improving the efficiency and productivity of our existing capabilities. We began to bring in educators to help us develop the new tool sets we needed. The process included bringing in people from the Radical Innovation Group. They worked with us on how to identify opportunities in highly uncertain markets, and how do deal with bringing folks from the Wharton Business School to work with us on the discovery-driven planning methodology. As activity grew, we began to formalize this program under the auspices of a quasi-Air Products University. Within it, we were already doing things around Six Sigma and project management, and quality. Inside of this, we created the innovation college. Within it, we began to teach classes ranging from creativity to how to develop market opportunities and assess those opportunities, right up to the execution of new businesses and new startup opportunities. At one point, we had 35 courses in the innovation college ranging from creativity to business execution. I am still involved in teaching some of those classes.

EL.  Can you describe some of the methodology that has come out of the Radical Innovation Group's seven-year innovation project?

RP.  I was involved with this Group for several years. The initial aspect of this Group and its methodologies included tools around planning for uncertainty. Most large companies operate on information culled from their existing businesses or existing experiences. As you look beyond your current technologies and current markets, you see many uncertainties. There are many assumptions that come into our thought processes. With the Group, it initially developed a set of tools that enabled us to manage those uncertainties at the very earliest stages. We called that the learning plan. It has grown not only to a set of tools, but to a set of organizational competencies.

Within the innovation process, the Group can identify the required separate competencies. For example, discovery incubation acceleration is a competency. It is the discovery of new ideas and new opportunities. The incubation focuses on formulating them and experimenting with them to get to a reasonable business proposition. Acceleration looks at growing them to a commercially successful entity or business or technology.

You also need a set of competencies that differ from anything else you have in the company. The idea of having a functional capability in innovation includes the competencies, tools, and the career paths for the individuals who work on the innovation processes.

EL.  How do you feel about open innovation communities such as InnoCentive?

RP.  InnoCentive and Nine Sigma are great tools for tapping the minds of the global audience. Companies need to tap into these tools as much as they can. You need to get outside of your own company. Open innovation enables you to do that. Companies not only need to do that, but they need to have their own people spending some time outside the existing company walls. For example, although Air Products is an industrial gas company, we would have people going to conferences that dealt with IP infrastructure for machine-to-machine services. It presented an emerging market opportunity for using IP to develop decision processes and analytics. We were doing it internally to some extent to run our plant. We wanted to get out and learn how to develop businesses in those kinds of markets.

Open innovation goes beyond using InnoCentive or Nine Sigma. Those two communities are part of open innovation. You need to get the innovators and the business leaders out into new spaces. They need to get outside of their existing business comfort zones and seek more insight from sources such as universities, startup companies, conferences and emerging markets.

EL.  What is the status of innovation right now in U.S. companies, given the economic downturn? Is it something we need to focus more on?

RP.  Companies are focusing less on it. Instead, they are working on improving their bottom line in this economy. There is not much top-line growth going on right now. I should clarify that I have not done a rigorous statistical analysis to know the extent of this. Obviously, there are exceptions to this comment. In reducing that cost, companies have eliminated much of the longer-term focus around innovation and new products. Instead, they have focused their new products' organizations around products that have more reactive market payback within 12 months to 18 months. Because of the economic downturn, companies have cut their long-range research and development. In the long term, this could potentially prove disastrous, not only for companies but for innovation in this country. That is a big issue.

The question: Should they be doing more innovation? As an outsider from the Wharton Business School, I find it easy to say 'Yes, they should be doing it.' Senior managers have a difficult time deciding to spend money on things that will not happen for three to five years, especially when the company is struggling to get in the black. Some of the forward-looking companies have started to increase their innovation efforts. I see some light at the end of this tunnel.

EL.  What takeaways would you give CIOs and CTOs about innovation? 

RP.  If you talk to CTOs about building some functional capability around engineering or chemistry, they would know exactly what to do. They would put in place a set of guidelines, strategies, and hire the right type of people to drive the right type of programs. They need to do the same thing around innovation and around longer-term growth opportunities. We keep treating innovation as though it is something similar to what we do today. We just need to take a couple of bright people and put them in jobs to go after innovation. The reality is the way CTOs and CIOs need to think about this. Innovation is a function, but it is a different function than what we do today.

The Radical Innovation study at Rensselaer looked at the importance of innovation as a function. This function, according to the study, needs to include a set of tools, a set of capabilities, and a group of people who see a career path in this. If you do not have these things in place, then it will be difficult to carry out innovation. You might take a one-off kind of innovation occasionally. For the most part, sustaining this type of innovation would be extremely difficult. My simple one-line message to CTOs and CIOs is this: Start thinking of innovation as a function and do exactly what you have done in your other functions to build the capability.

EL.  At the Wharton Business School, you teach a course in entrepreneurship and innovation. What was the 2009 response to this course?

RP.  I teach on the West Coast in Silicon Valley in San Francisco. The course has always been popular. This year we have the highest number of students that we have ever had. At one point, enrollment was nearly double what we had in 2008. Is that due to the economy and everyone thinking they want to start their own business? Is it due to us doing a good job teaching the course? I cannot explain the reason for the spike in enrollments. My class a year ago was probably the most successful class I ever had. Six of our business plans made it to the semi-finals of the Wharton Business Plan Competition. We see many young engineers and managers of large companies (this latter audience populates our executive MBA program) thinking they want to go off on their own. Perhaps, they do not see the growth and career opportunities in their own companies.

EL. What made the two different innovation departments at Air Products successful?

RP.  It was many things. We got people out of their comfort zone. We had a group of people who went out and found new things. We had a group of managers who spent time on it. We used to meet with the senior management team monthly to talk about ideas. Senior management put an enormous amount of effort into helping and thinking about the growth opportunity. It turned into the growth board comprised of the senior-level executives who controlled 90 percent of the resources of the company. They focused on what new opportunities we looked at, and what we did. This type of thinking and support contributed much to the success. Then we taught people how to do things. We learned that you could not use the existing type of Six Sigma Stage-Gate tools to drive long-term innovation. You needed a set of different tools, like the learning plan methodologies and discovery driven growth.

EL.  Did you work with the CIO at Air Products?

RP.  Yes. We launched a couple of business initiatives that dealt with IP capabilities because the company was into this type of monitoring. The CIO sat on our advisory board. He understood the needs that we had from an IP perspective. He was a manager looking outside the company. At the time, our IT organization primarily focused on infrastructure support, which is what most IT organization in large companies concentrate on. We needed to go outside and get some development capabilities. He was a strong supporter of the innovation capabilities as they related to IT.

EL.  Are you seeing much innovation from U.S. companies?

RP.  Emerging companies right now face the challenge of lack of capital. I am on the board of two emerging energy companies that have a fair amount of innovation going on, but they have found it difficult to raise money from the venture capital community.  A decade ago, VCs had no qualms about funding companies. During 2008 and 2009, VCs cut back substantially on funding new ventures.

Meanwhile, large companies face a similar dilemma around funding new ventures. They, instead, look for more sure bets rather than taking a risk. Everyone wants to put their money in a sure bet. Sure bets often do not turn into big new things. People like Andy Grove are not convinced they will see the next Google or Microsoft. I do not think there is anything like that out there now. Today's good technologies will not turn into major innovations that will drive the next generation of growth in this country.

EL.  Where do you think the next information technology innovation will come from?

RP.  We now have the Internet and tremendous IP capability. This entire issue of smart services will probably be the next area of innovation. Much of the runway there can create a tremendous amount of value, particularly in the energy space, as well as other industries. Many service layers need to be on top of this capability to drive not only Web 2.0 kind of stuff and social networking, but real industrial-type analytics that allow us to drive smart services and decision-making. This one area of the IP space still has opportunity.

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com

If you ask some C-level executives what they might do after they retire, you could hear something like, "I've thought about writing a book which chronicles what I learned running a major company." Unfortunately, few CEOs write management books after they retire. Furthermore, it's rare to find a senior executive who has written one while he or she is still actively on the job. Bob Seelert, the chairman of Saatachi & Saatchi, one of the world's largest advertising companies, is that rare kind of executive. He is one of the most insightful executives to emerge in this troubled business landscape. His new book, Start with the Answer, is a back-to-basics primer for anyone in a leadership capacity.

Seelert has been with Saatchi & Saatchi since 2003. After graduating from Harvard Business School, Seelert spent the next 23 years with General Foods Corp. where he eventually became CEO of Worldwide Coffee and International Foods. He closely observed one of the largest mega-mergers in United States' corporate history - Philip Morris's acquisition of General Foods. His career also included leading the turnaround of Topco, a grocery industry co-operative, and Kayser -Roth Corp., a leading U.S. manufacturer of leg wear.

Enterpriseleadership.org recently sat down with Seelert to talk about the management challenges CEOs, as well as other C-level executives, face dealing with the economic downturn.

EL. Why did you decide to write this book?

BS. A creative person at Saatchi & Saatchi told me that my wisdom set me apart from other executives he had known. After he said that, I got to thinking that, in fact, I dispense advice, council, and perspective. It's based on my collective experience. Perhaps, I know quite a bit about many things. I decided to put down the wisdom I have collected over a career that spans five different companies and 40 plus years.

The book consists of a series of easy-to-understand points about things that can lead to success in your career and high performance in companies. My book is drawn both from business and my life. You can pick up this book, read a few sections, and then put it down. It is biblical in that sense. That's the one comment I hear frequently.

EL. What are the three top lessons you learned as a CEO?

BS. Leadership begins at the top. Having the right person in the CEO seat can make all of the difference for a company. You can cascade that down the organization as well. Next, you always have to be open, honest, and candid and get a straight forward assessment of the facts. Some times the truth can be pretty ugly. Until you get it on the table, you are not in a position to deal with it. Unfortunately, many people do not look down the pike at the truth. It is one of the reasons they don't make progress. Throughout the book I adopted the predominant philosophy which became the book's title - Start with the Answer.  Before you go off and spend much time and money, you have to assess all of the facts about where you want this to end up. In essence, if you start with the answer, then you are in a position to work your way back to the solution.

EL. According to industry consulting firms, such as Gartner Group, the average CEO tenure is about four years. Why is CEO turnaround so high?

BS. In some cases, you may have the wrong person. He or she may not have the right vision for the company. Also this person may or may not have established the right standards of the performance expectations and may or may not have delivered against what he or she had initially proposed. He or she may or may not have unleashed the energy in the company for building the right kind of rapport and relationships with all of the employees. Impatience heightens all of these things. In this short-time world, others judge executives by what have you done for me lately? You have to deliver against what you said you would do. It's a combination of factors.

EL. What challenges do CEOs face in this economic downturn?

BS. They are coming under more pressure now. This is the most challenging environment that businesses have faced in decades. A recent article I wrote about leading in tough times lists the 10 things you need to do to lead successfully. First, you need to get the truth on the table. Make sure you start with a good cold heart assessment of the facts. Second you need to establish the right kind of standards for the new reality. You can establish a performance expectation in terms of how you will perform relative to the market.

At Saatchi & Saatchi, we do not know how far off the media environment will fall. We know that we want to beat whatever happens by 50 percent. That is a relatively high expectation in an assured market sense. We want to use this as an opportunity to grow our share of the market. Others include the following: Think long term but act short term. Communicate, communicate, and communicate. Do whatever it takes to get in front of your people to reassure them that you are going to lead the company to see a better day. Tough times call for extraordinary efforts by everyone in the company. Get with your customers to see how their needs are changing and how to best respond to those needs.

EL. What companies do you most admire and why?

BS. I admire the leadership of Toyota and Procter & Gamble. Toyota has done a good job of driving innovation and making continuous improvements. Even through automobile sales have fallen, Toyota has continued to add enhancements to the third generation Prius. In fact, some auto manufacturers do not even offer a hybrid. Toyota's new Venza fills a gap this company had in the market. Toyota continues to stay true to its long-terms goals of innovation and continuous improvement. Meanwhile, Procter & Gamble has reframed the value of some products to better fit the economic environment. For example, it has introduced a low-cost version of Tide. The company reminds people that Tide will help them keep their new clothes looking that way longer. This feature and benefit appeals to consumers in this type of environment.

EL. So what type of a balancing act do CEOs need to do in this environment?

BS. Despite the rough times, you have to add some people and create some new capabilities. Whenever you add people, however, you need to look at where you can reduce. Adding a new capability also means thinking how you can eliminate something you no longer need. You need to make tradeoffs in this kind of tight environment. To pay for the additional staff and capabilities, you need to think about the reductions and the elimination.

EL. As the CEO of a major advertising company, are you seeing your business evolving more to social media?

BS. Absolutely! Our world has moved from talking to people to building connections with them. We want to create information that is useful in peoples' lives so our clients will be invited in their homes.

EL. Can you briefly describe some of the technology trends you have seen in your career?

BS. When I worked at General Foods and Philip Morris, hardware and a centralized IT environment dominated the company landscape. Today, we can disburse software applications so they are closer to meeting the needs of disparate, decentralized entities. People at Saatchi & Saatchi not only need to understand technology, but to understand how it affects the way they access information, the way they lives their lives, and the way they make decisions. We have various centers of expertise that touch all of these things. You need to embed these things in every operating unit today. You cannot have a periodic get together with some center of expertise that tells you about this that and the other thing. You need to be living these things on a day-in and day-out basis.

EL. You prefer to talk about corporate dream as opposed to operate vision. Is that something that can be applicable to any company?

BS. It can be and should be. I have a story in the book called Tape Your Strategy to Your Forehead. There is a big difference between a dream and many mission statements. You should be able to express your dream in 20 words or less. People should be able to tape it to their forehead. You see a lot of vision and mission statements that go on and on. People do not have a way to quickly state back to what is this company all about. When I did the turnaround for Kayser-Roth Corp., we said our dream was to become the best leg wear company by meeting customer needs better and faster than competition through total quality. It is 20 words. It said this is what the company is all about. At Saatchi & Saatchi we want to be revered as the top house for world changing ideas to create sustainable growth for our clients. This is a pithy, meaningful statement. We expect everyone in the company to take this forward and know what the company is about. This kind of thinking energizes every employee.

EL. When you were at General Foods, the company went from a centralized to a decentralized structure during the acquisition by Philip Morris. How did you deal with the CEO so everything was harmonious?

BS. In the book I say that centralization and decentralization can be the nitroglycerin of organizations. Individually they are fine. However, together they can create some real problems. You need to be one or the other. One company highly centralized, while the other one was highly decentralized. It just never got to be a happy marriage. There was no way to bridge that kind of gap. General Foods was a matrix organization with many centralized resources, such as IT. We had ways of cross roughing them with the line organizations to get out of the decentralized needs of the various businesses. Centralization ends up often times being a one-size-fits-all environment. It is a difficult approach when your business comprised of an entire bunch of disparate business with no relationship to each other.

EL. What is your organizational structure at Saatchi & Saatchi?

BS.  We are disbursed geographically across 83 countries. In some areas we deal with affiliates. We have an entire series of company beliefs that we distribute around the globe. We start with our inspirational dream ad. Our local management and applications are highly decentralized. We will give them the beliefs, values and principals. The applications and the plans are in the hands of local managers.

EL. Can you describe the differences in the strategy process at the companies where you were CEO?

BS. General Foods had an intensive strategic planning process. In fact, it could drag on for a year and wind up being a three-inch thick book.  By the time it got done, it was time to start the next strategic planning process. At Saatchi & Saatchi, we have the entire thing down to a single page that tells you everything you need to know about our strategic direction. Most companies will never get to that type of an environment because spend too much time strategizing about the future. Instead, they should spend more time thinking about it and making it happen.

We operate on two types of beliefs - 'one team, one dream' and 'nothing is impossible.' We have an entire series of beliefs and character statement. We have the challenge to become the agency of the year in every market in which we operate. Our organizational focus includes filling the world with love marks, which is a strategy to elevate brand to customer loyalty and beyond.  We can put all of this stuff on one piece of paper.

The next thing we do is to put together an annual plan. We try to cascade what we call our 100-day plans throughout the company. It consists of the half dozen things you want to get done in the next 100 days. If you knock those things off, you get your next 100 days. That makes up a year.

Elizabeth M. Ferrarini -She is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com

When Ralph Szygenda joined General Motors as CIO in 1996, the automaker was one of the largest, most diversified corporations in the country. However, the IT organization was at an all time low. GM had just unleashed EDS, the IT outsourcing organization. Szygenda says, “There were about 20 of us left in the company who knew anything about IT. EDS did everything. We had to start from scratch to rebuild IT.”  Thus began Szygenda’s legendary career to become the global CIOs most CIOs want to emulate. He and his team began to build what would become the world’s largest outsourced IT organization. He says, “We consolidated endless numbers of systems, applications, networks, and processes.” Under Sygenda’s leadership IT’s focus shifted from systems to cars, customers, and innovations, such as OnStar. GM emerged as a global business, especially becoming the number one automaker in emerging markets such as China.   Now things are different. Szygenda retired on October 1, 2009, as GM emerges from bankruptcy to become a more focused, leaner automaker. He says, “Now the entire company can focus on getting closer to its cars and customers. ”   A month before he retired, Enterpriseleadership.org had the pleasure of sitting down with Szygenda to talk about how the role of IT changed the company, how GM plans to deal with some of its operational issues outside of IT, and what changes we might see for  the IT organization.  Here is what he had to say:

EL. Because of the bankruptcy, how did the company's business strategy changed? 

RS. Clearly, it is still in development. A couple of things happened. The bankruptcy took away many of GM 's decades old legacy problems. More management time went into legacy, healthcare cost, and Delphi, a bankrupt automotive supplier spinoff from GM. We had to give Delphi more money than anticipated to keep it alive because of its criticality to our supply chain. GMAC, the financial services business, has also gone away. Our strategy is to concentrate and make time for our customers. That is what a car company really should be doing. It gives us an opportunity to do this without many of the legacy issues we had in the past.  

EL. What changes have you made or plan to make to the IT organization and how will these changes affect the outsourcing partners? 

RS. Not a significant amount! I believe in the IT organization shadowing or mirroring the structure of the business. It goes for any company. As GM restructures and changes how it runs its international operations, the IT organization also changes to adapt to that particular area. Our base strategy remains the same -- to use process information officers (PIOs) as well as CIOs. These people drive the common elements of product development, manufacturing, or supply chain across the company. That strategy or that direction for an organization issue will probably stay in place. 

EL. Do you still have the same number of outsourcing partners? 

RS. During my past 13 years here, we have reduced the number of suppliers to less than 20 key IT suppliers. That number includes all of the product companies, such as Microsoft, Oracle, and Cisco, as well as services company, such as IBM, HP, Capgemini, and Wipro. We have mostly service providers along with both hardware and software product suppliers.   From an IT viewpoint, we run our sophisticated model of buying and brokering IT. We have 1,000 people inside the company that have the responsibility to design the business direction and the acquisition of IT.  

EL. How will the IT budget change and what new IT investments do you plan to make because of the restructuring? 

RS. IT cost will bottom out this year. It has been difficult because of the bankruptcy and the conservation of cash. We have reduced cost every year for the past 13 years through efficiency. In other words, we have taken cost out of the operating side of the IT business and put it back into development of new capabilities and application. This year that figure has been lower than what it has been because of the bankruptcy. It will start to go up again because we cut it very severely this year. So going into next year, we will put more money into innovation as the business changes the particular processes where it wants to go. 

EL. Can you describe the investments you made over the years that have really paid off? 

RS. Twelve years ago, this company operated very decentralized with autonomous business units. Today the company runs the common processes for product development, supply chain, and manufacturing the exact same way throughout the world using this exact same technology, saving a significant amount of money and permitting great speed for product development. For example, 12 years ago, we had 23 computer aided design systems. Today we have one. We cut the product development cycle time by more than 50 percent. We have approximately 30,000 design engineers around the world using this same technology. People on different continents can work in parallel to design together. We move eight million vehicles throughout the world using the same supply chain systems. We purchased $90 billion dollars of services and materials using the same purchasing systems throughout the world. We deliver just in time to plants and manufacturing facilities across the company.   OnStar is another example. We have five million customers using that technology in vehicles. It saves many people's lives. We can diagnose vehicles and tell our customers all through technology that they have an issue. If they have an accident, we can notify emergency resources through satellite systems linked to our call centers. We can stop stolen vehicles automatically if the police officer wants to bring the vehicle to a halt. The person driving is in trouble. All that includes technology changes that have occurred in the company over time.   At the same time, we have saved significant IT dollars through efficiency. In fact, we have reduced billions of dollars. At one time, we had 7,000 IT systems. Today, we have about 1,500 systems taking out billions of dollars of costs, and moving from autonomous businesses to very common business There have been significant changes in the business. 

EL. Can you describe the current governance process for making technology investments? 

RS. We have CIOs for the major business units in the company. Given the company's global size, 14 years ago we created the role of process PIOs or experts in business direction. For example, we have a business PIO in change of the entire product development process, from concept to actual vehicle development. We have another PIO who handles all manufacturing processes throughout the company. Another one has the supply chain. They drive initiatives across the entire company by doing two things: trying to put together and analyze the business needs, and driving the strategic direction with the business leaders on defining the most important requirements to transform the business.   Every year we do a portfolio process where we analyze those needs coming from the business PIOs, such as the PIO for product development. In this case, we would work with an IT project management officer to see what the company needs. We also do a comparative analysis or a competitive assessment of all of our competitors each year. Next, we take all of the particular IT requirements we need to do and we rank from one to 60. We go back and socialize with the business leaders, come back in, and ask senior management in the company to evaluate how we should proceed. This occurs every year through a pretty detailed portfolio process for the company.  It's unclear whether we will modify this process. I don't think it will happen totally. It is business driven, kind of a ROI investment area. We look at ROI in two areas -- one is analytical based on cost savings, and the other one is intuitive based on what we think we need to do. We look at business ROI, which includes IT. We do not do independent IT, except for running the computer center, or telecommunications, I don't expect a significant difference because the process has worked successfully over time.   GM's major issues revolve abound legacy cost issues of not having the right products for the marketplace. It is a global process around the company. I'm not sure anyone will say there is an issue with that. We had a 40 percent reduction in the marketplace of sales, which cash could not overcome.   

EL. How do you categorize the technology investments?Do you look at what is innovation or what is explorative? 

RS. I have a strategy manager who works across the entire portfolio process. Under those areas, we have clearly new process transformations, which include strategic area changes in the portfolio. Then we have, what I call, more tactical new product launches in the company that need IT investment, such as regulatory or initiatives to keep the business running.  Next, we have strategic business process transformations. For example, we have different regulatory requirements in Russia and in China. We have to meet all of those. We have new product launches every year because the vehicle designs change. Here we might need more leading-edge technology. We might experiment with new IT in areas where we see how they would adapt to GM from that perspective.  

EL. Are you going to make any changes to the way you measure your technology investments? 

RS. It is solid ROI with a total business appropriation request.  Any major changes must link with the business for measuring a business change. You can't get much better than that. On the other hand, the intuitive side is very difficult to measure. For example, how do you evaluate every new change to a new HR system?  Some of that is intuitive. I am not sure we will change that. We will change the business's end goal to focus more of customers and the cars. We will drive a different perspective from more customer-oriented systems, more product information gathering, and new ways to communicate with the customer. We will drive more investment in those areas. The IT process will not change.  The business needs will tend to tilt and change more toward the customer, the vehicle design, and the need to meet the market needs.  

EL. Have your expectations of your internal staff changed? 

RS. This organization has always been very aggressive. Most of the people on the senior IT leadership team have come from outside GM. As a result, they have had different mindsets, and difference experiences over time. The overall IT speed of the company will accelerate. We will have to deliver our requirements faster. Our IT people view this as a positive move. However, they will be under greater pressure, along with the IT suppliers, to deliver quickly on these requirements.  

EL. Can you describe your growth in foreign markets?

RS. Ten years ago, we were not in China. Today, we rank as the number one automaker there. If you look at the new emerging markets, GM has done quite well there because it did not have the legacy area. People say, 'How can GM be a leader in China and still have all of legacy problems and then go bankrupt in the U.S.?' We did not have the legacy cost issues outside of the U.S. I appointed an emerging market head who makes sure we address those markets from an IT perspective very quickly. 

EL. Is GM looking to move OnStar into new markets such as healthcare? 

RS.  Coming out of bankruptcy, we must concentrate on the core automotive businesses and nothing else. GM has a long history of being in all types of businesses, everything from heating and cooling to owning Hughes Corporation. In fact, we owned EDS when I joined the company. Diversification is not one of goals right now.   OnStar plays a key role in the insurance industry. We understand, as well as provide, all of the internal analysis of the vehicle electronically. For example, an insurance company might say, 'We will sell you insurance on the miles driven.' This information automatically feeds the insurance company. It is paid per usage. We are doing some of these things.   For the government, we can monitor vehicles with OnStar. We know which vehicles have evacuated from a hurricane. We can tell how many people are on the highways. We immediately work with government agencies to give them that input.   We leverage the fact that the vehicle acts as another node on the IT network. This leveraging helps us to use OnStar for online navigation and information you want. Many businesses have wrapped themselves around that. One example includes directing people to restaurants. There will be more of that. The killer application will always be safety and security followed by navigation. It is hard to find applications that may be extremely successful after that. It is a new territory for innovation.  Today OnStar has no direct similar competitors. We have about five million customers. Other companies install tracking devices into cars after they are built. No other competitor builds a system like OnStar directly into the vehicle. If there is something wrong with my vehicle, I get a diagnosis via email.  

EL. What is IT doing to drive innovation within the company?

RS. For a long time, IT has have been transforming all of these business processes, and transforming the technology in the vehicle, though innovations such as OnStar. We are taking that process to other parts of the world. The processes in the company for product development and manufacturing are very good. They will not affect GM's ability to compete in the automotive business. This is a fashion business. You need the right car or truck to meet customers' needs. These needs could include energy efficiency, comfort, or reliability.  Ten years ago, IT was fragmented or spread across the world. For example, within 10 years, we have gone to no presence in China to being number one using IT. This is a nice success story. GM also uses more social media than any other company. We have been into blogging for years. We have experience with Second Life. We will see more of that.   The next generation of technology will offer more transparency to customers, letting then know everything about our products and our company. Our next move includes making sure GM has the speed it needs to transform after the bankruptcy. Our legacy issues are gone.   GM had two issues -- legacy cost which was a major driver and the 40 percent drop off the marketplace. You can see right now with the Cash for Clunkers how many people are buying cars because of the stimulus.  IT has never been an issue for IT. If you talk to any members of the executive team today, they will tell you the same thing. I am not sure that executive leaders in other companies would say that IT does what I need it to do.

EL. What was the genesis for GM's major outsourcing of IT? 

RS. When I joined the company, IT was decentralized. It offered mediocre processes.We inherited outsourcing when GM spun off from EDS. We had to make it work. In 1996, we were the largest corporation in the world. About 20 people who knew something about IT remained with the company. EDS handled everything else. We had to make it to work.  Industry analyst reports say that 70 percent of all enterprise IT includes acquired services through some form of outsourcing. It is a way of life. We did it way before our time. We have done it pretty well. It has allowed us to move quickly. We did not have to worry about having all of those internal people and assets in the company and trying to make it leaner. We could never have moved that fast with technology. The Internet also enabled us to redesign all of the interfaces, whether it is to the supplier, or dealer using the Internet. If we had to do that from a hard-coded environment, it would have taken us a decade or more. It took us three years. 

EL. Can you give me some examples of IT firsts at GM? 

RS. We were the first one in California to display customer info versus going through a dealership 10 years ago. We were the first one to interface with a supplier base. We had 1,000 of suppliers at that time we were buying $100 billion of materials and services. We did all of that online. Meanwhile, the rest of GM was encumbered by speed in areas such as production. Within three years, IT helped transform GM. IT will not keep GM from being successful. Instead, it will be whether or not this company can meet customers' needs with the right products fast enough. The perception quality problems have taken decades to fade away. Most people believe we have good products and want the U.S. auto industry to succeed. The entire American car industry still has a perception issue that will linger for a few more years.  That will occur in the next couple of year.

Elizabeth M. Ferrarini - She is a technology writer from Boston, MA. Reach her elizabethferrarini@yahoo.com.  

Why do some CIOs struggle to keep the lights on and butt heads with management every time there is another cut to the IT budget? In contrast, why do some CIOs receive all types of accolades, awards, and publicity for their IT leadership accomplishments? The latter CIOs have an easier time achieving business impact of IT than their struggling CIO counterparts for several reasons: These CIOs know how the business works and have been empowered to use IT to make things happen. What’s more, these CIOs work for CEOs who know that IT done well can make a difference in the company’s growth and profitability. These executives work together to find the right IT model for the business, make a range of IT investments to fuel current growth and to explore new ideas, and make sure the company can function in a digital global economy.  In other words, these executives are IT savvy. 

Executives who want to become IT savvy should pick up a copy a 150-page book written by Peter Weill, chairman of MIT Sloan School’s Center for Information Systems Research (CISR), and Jeanne Ross, director and principal research scientist at CISR.  In fact, the 160-page book is appropriately titled IT Savvy – What Top Executives Must Know to Go from Pain to Gain. Written in easy-to-read language, the book draws from research down by CISR, including vignettes about companies that have done a good job of transforming their IT organizations. The book’s appendix has a survey that allows you to rate how IT savvy you are.

Enterpriseleadership.org recently sat down with Jeanne Ross to dig deeper into the advice both authors provide in the book. Here is what she had to say:

EL. In the case of Aetna and BT, you talk about what the CEO did to bring about an IT transformation. What was the CIO’s role in this?

JR. We see successful cases where a CIO can take the lead and help the CEO see what it is possible. That’s not the point of this book. If you are a CXO, don’t wait for that to happen. You need to grab control and think of how you want IT to take your business forward. Meg McCarthy, Aetna’s CIO, will tell you that that Ron Williams, the CEO, was in charge. ‘He knew what he wanted, his vision was very clear, and my job was to deliver.’ She had to be extraordinarily good at that. On the other hand, she frames her role this way. It is a very different kind of leadership role. She didn’t have to convince anyone of the importance of IT to the company, as many CIO do. She just had to make sure that IT was first rate, and very professional. She also had to do the things so many CIOs assume they should do, but have trouble doing them. Why? Many CIOs lack the authority or have not been given the go ahead to take the business leadership role. Williams gives McCarthy all of the credit in the world for delivering.

EL. Okay, so what role did the CIO play in the IT transformation at BT?

JR. The BT CEO knew that IT needed to be more important than what it had been.  He brought in a CIO who could help him derive more value from IT. BT is a similar case to Southwest Airlines, which is also in the book. At Southwest, however, the CFO, who later became the CEO, spearheaded the IT transformation. These leaders realized that IT has to be really important. They also want to use IT in a way that yields the most value. They find the best CIO. Together they work hand in hand to make things happen in this company. In both cases, we saw a very tight partnership between an IT leader who helped provide much of the vision the CEO knew he wanted. The CXO was waiting for a CIO to help him see it more clearly.

EL. Is an IT transformation part of an overall corporate transformation?

JR.  Companies that base the transformation on moving more toward a global digital world will often recognize that IT has a critical element in making that happen.

EL. When selecting an IT operating model, what role does the business architecture and other architectures, such as enterprise, play in the process?

JR.  In an ideal world, you pick the operating model and then you define all of your architectures. Realistically you need to know where you are starting from. If you have had a siloed architecture, then you will get into trouble if you adopt, say, a unified operating model, where you standardize everything and integrate everything. If you grew up with siloes, you will have a long journey to unification. You would be better off taking intermediate steps that would take you to either replication or coordination.

Companies that haven’t had any discipline around technology, and that haven’t been thinking about architecture cannot just select an operating model. It just is an overwhelming change, and it is hard to do. As a result, companies in this situation might have their options limited. On the other hand, if you have always been good at architecture, you can select anyone you want and probably be able to pull it off.

EL. You say that IT savvy firms have a 20 percent higher margin than their competitors. Can you discuss your research process to arrive at this figure?

JR.  Because this is Peter Weill’s research, I need to piece this together. I should have asked him this question. Of the 600 firms in his sample, he took the top 25 percent of performers. He then went to those that were publicly held and pulled out the financial data. On the average, these companies had profit margins above 20 percent.

The methodology we used to pick these IT savvy companies would lead us to a very similar profile. My research focuses more on enterprise architecture, while Peter looks at how companies spend their IT dollars. We find a huge overlap in the companies with mature enterprise architectures and those companies that spend their IT dollars wisely.  Although Peter and I ask very different questions, we come to very similar conclusions on which companies are really deriving value from IT.

EL.  Many CIOs say that measure the success of their IT based on ROI. Is this a reliable metric? If not, what do you recommend they use?

JR.  ROI is not a bad metric. However, if that is all you are using, you will be headed down the road to more siloes. You have to be careful using an ROI. If you are going to make different kinds of investments for different reasons, you should be explicit about that. You do not want to have an ROI metric for everything you do because that it not why you are making all of your investments.  You are making some investments for ROI, and you might be making some investments to experiment on new ideas. ROI doesn’t work for experimentation or exploratory investments. You will eliminate all experiments real early if you use ROI.

In chapter 3, we say that your portfolio of financial investments has different goals so should your portfolio of IT investments. You should be very explicit about that and then match metrics to whatever you are looking for. So, most companies need to have an experiments budget for IT. Peter Weill calls them the strategic investments. As I mentioned, an ROI will absolutely destroy that effort. You need to look for a metric that helps you to evaluate what comes out of the ideas you have.  If you go back and look at the portfolio of things you did two years ago, you might look at what things had potential and what you should continue to invest in. If nothing had potential, you might say that you have the wrong approach, you are investing the wrong amount, or you are inveseting in the wrong projects. There is no single answer to that question.

We think that post implementation reviews are essential. So you put together a business case, and you ask yourself honestly what are we trying to get out of this? After it is done, you ask yourself if you did. That is how you are going to learn going forward. It is not so much what metric you use. It is about how you use those metrics. You need to follow up on them to check to see if they were realistic and you got what you expected.

EL. The federal government uses the earned value management metric for IT across all departments. Is this metric good for the private sector to use or is it just tailored to the government?

JR. I am not sure how they are doing that. I don’t think I can answer that. Our research does not extend much to the federal government IT. We have done a fair amount of presenting to government people and occasionally advising them. Our sponsors are all for-profit companies. That’s why we have had little interaction with the government.

EL. What are some of the methods IT savvy organizations use to communicate business value to their constituents?

JR. We noticed that Yury Zaytsev, CIO of Swiss Reinsurance Company, a global financial services company, always talks about IT situations in business terms. We said to him: ‘You are always talking about what the business is trying to do. It doesn’t matter if you are talking to IT people or business people, you instinctively talk about business. How do you do this and how do you train your people?’ He replied that he just does it. I get his point.

If you look at the cases in the book, such as Campbell Soup, Southwest Airlines, and Seven 11 Japan, executives at these companies do not realize they are doing something different from people who do not communicate well. They just say this is the way I talk. This is what we do in our business.

Some CIOs instinctively talk in terms of real business value, while other CIOs do not get it, but they think they have it. For example, these latter CIOs might talk about network downtime. No one cares about downtime. They might say, ‘Well, we talk about it in business terms.’ You do not talk to your business partners about downtime. You need to stop having interruptions or downtime by getting the basic operational stuff to work right. You should not have to explain what is going on with the technology, why it breaks, and why it is expensive. You have to get passed that.

You need to focus the attention of IT on how the business runs and makes money, and where does technology have an impact. If you start your own thinking process from the other end, then you will not be so concerned about how to communicate in value of IT or what metrics you use to measure IT value. You, instead, can concentrate on understanding the company’s biggest concerns and what IT can do about them. In IT savvy companies, CIOs think differently than their counterparts. IT savvy CIOs look at what is happening while everyone is in the valley tries to figure out what they are doing. These CIOs recognize that they have this unique perspective and can articulate and believe what is possible in the organization.

EL. Do you ask CIOs how they communicate with their rank and file?

JR. It is a very interesting question. George Westerman is working on that right now, and he will come back from this study with some ideas.

EL. In IT savvy organizations, what is the CIO’s role on the board of directors?  Do these boards have an IT committee or does the CIO sit on the audit committee?

JR. I will have to admit that we have not looked at that at all, especially in this book. We try to define the role the CEO and other CXOs ought to be taking. Are they savvy enough to recognize where IT fits in all of their operations and thus what they would have to report up to the board? You pose some interesting questions. I am surprised we have never studied that issue at all. On the other hand, if we go out and get a feel for the landscape, we will probably find many CIOs who have limited contact with the board of directors. We would have to search for those CIOs who engage regularly with their board.

EL. Have you looked at the types of portfolio management tools that companies use for IT?

JR. No. we have not gone into that at all. We have looked at the strategic view of how organizations think of their IT portfolio as opposed to what tools they use to manage it.

EL. About 60 percent of UPS’ one billion IT budget goes for running the business, and the rest goes for new investments. Do most CIOs have a good handle on a metric like this one?

JR. CIOs should pay much attention to that type of metric. Many of them don’t know the answer to that question. It is valuable to monitor that and to try to push money out of the operation and into the development side.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

Budget Cuts. Layoffs. Shrinking Revenues. When tough times hit, many executives have a hard time singing the praises of their companies' greatness. J. Barry Griswell, the retired CEO and former COB of the $11 billion Principal Financial Group, says adversity provides executives, as well as their employees, with an opportunity to make positive adjustments and then some. In fact, Griswell, along with Bob Jennings, has written a book called, The Adversity Paradox: An Unconventional Guide to Achieving Uncommon Business Success.

The personal adversity Griswell experienced growing up became the underpinning for much of his success as both a corporate leader and a humanitarian leader. While he was CEO of Principal, which offers 401(k) and retirement plans to businesses, he oversaw a $1.8 billion initial public offering (IPO), which helped the company's expand its product line. As of 2008, the company had $308 billion in assets under management and 19 million customers. Griswell serves of the boards of Herman Miller and Principal. Throughout his career, he has been active in various industry and community organizations. He has received many public service awards, such as the Horatio Alger Association Distinguished American Award and the Alexis de Tocqueville Society Award.

Enterpriseleadership.org recently sat down with Griswell to get his perspective on successful leadership, especially the role of a CIO. Here is what he had to say:

EL. Usually consultants and academics write books about effective corporate leadership. Why did you, as the former CEO of a major company, decide to write a leadership book focusing on adversity?

BG. If you want to have a successful book, you should write about something you care about and something that has touched you. I came from a tough background, riddled with much adversity. When I got into management and started recruiting people, I learned success, particularly for sales people, included learning from exposure to adversity. If you can overcome adversity, then you have a greater chance of being successful. You can learn the lessons of life -- tenacity, persistence, and optimism. I got so interested in this.

In 2003 when I got the Horatio Alger Award, I couldn't believe I was joining other award recipients, such as Oprah Winfrey, Denzel Washington, and Howard Schultz, CEO of Starbucks. Each one had overcome some type of adversity, learned from it, and then went on to achieve great success. Bob Jennings, my co-author, and I decided we wanted to study adversity and see what makes it happens. Of the 100 resumes we reviewed, we selected a number of top people to interview. Our goal was to come away with a number of lessons we could pass on to our readers about how to overcome adversity.

EL. Some management reports say that CEOs average about four years in a position. Some CEOs have gotten themselves in trouble. Where do some CEOs go wrong?

BG. Some CEOs forget where they came from and just look at where they want to go. A chapter in my book talks about what matters most on the job --integrity and moral development. Some people just do not have well- developed morals. These characteristics take years for people to develop. You need to make sure they are foundational and real. Some people who get to leadership levels lack moral development. It becomes apparent as time goes on. It is unfortunate. Letting power go to their head causes many people to get off track. They think they are invincible. Some CEOs think because they occupy the top spot in the company, they cannot do anything wrong. Not true! The CEOs I have seen fall possessed many of the negative qualities I have mentioned.

EL. How did you give back to the community so you just were not just a corporate person?

BG. Being on a corporate board is self-serving. People of means should give back their time and their energy, and their financial resources. They need to lead in that area. I have tried to do that. You need to do things to help your community and the people in need. That's how you can make a difference.

I have been extraordinarily involved in a number of things. Today, I still serve on the board of the United Way of America. I run our local campaign. I support the Boys and Girls Club, both locally and nationally. I am trying to help the people of the Crow Creek Native American Indian Reservation get back on their feet. I provide significant financial support to my alma mater, which is a local college.

EL. Do you look at that kind of character when you hire executives?

BG. Absolutely! You want to ask people: 'Give me some examples of how you have given back to the community over time.' It is so easy to spot. If someone says, 'I really believe in doing those things, but I'm so busy in my career. I haven't had time yet.' I don't like that answer. We need well-rounded individuals in corporate management. People can find time to give back a little bit of their time and money.

EL. You ran companies that had great financial strength. How did you balance that with philanthropic pursuits?

BG. The Principal exemplifies a company that has tried to balance its financial strength of earning money and returning profits to shareholders, but also doing what is right for employees and the community.  If you got one of these things out of kilter, it ultimately causes you to warble and have problems. For example, United Way named has as one of its

best supporters a couple of years ago. Latina Style named us the best employer for Latinos. Fortune magazine has named us to its 100 Best Places to Work in the United States seven years running. We have many philanthropic awards.

EL. What qualities did you expect your business leaders to possess?

BG. Everyone would probably give you the same list. I always start with honesty, integrity, and then reliability. If you do not think someone is speaking the truth, then that's a red flag citing a potential risk factor. People need good intellect in order to play in the game. We all want to have people who like being on a team. It looks good for the cause. You also want people who have their own ambitions. On the other hand, if their own ambitions outweigh the good of the organization, that you have a problematic situation. You look for some flexibility and some collegiality. Of course, you want them to have a strong passion and drive for what they do. It is a blend of all those.

EL. Because CIOs work with colleagues across multiple business units, they need to work from a position of influence. How did you work with your CIO?

BG. When I was CEO, our CIO reported to me. That person now reports to the current CEO. Every company has its own way of handling the reporting structure for the CIO. We have gone back and forth with this issue. Today, we have a very strong CIO. We expect him to set standards, drive efficiencies, and drive platforms that the business units can use. At the same time, each business unit has its own CIO who is responsible for driving the use of technology within the business unit. You need to have strong central leadership along with some business unit leadership. It's about creating balance. My company has had a skewed IT organization on several occasions. If you let the business units run the show, then you do not get the advantages of the common platforms and efficiencies. Conversely, if you just have the corporate CIO running everything, then you do not get the best use of applications at the local level or business unit level. We have achieved the right blend of IT management.

Because our business relies on technology, the CIO role is important to us. We are the leader in administering 401(k) plans, daily values, and paperless movement of data. We do millions and millions of transactions. We would be swamped if we weren't innovative with our technology. In fact, In 2008 Computerworld recognized us as one of its Premier 100, the top 100 companies with innovative uses of technology

EL. Is there a process you followed to make the right investments, especially in technology?

BG. Like every major corporations, Principal has to quantify the return on investment. When I was CEO, we had a Web-based ROI computation that had many inputs. Each business unit's project management handled large technology projects.

Although corporate uses uniform tools, we also recognized the need for judgment and gut feeling if we in the early stages of dealing with something new. We want to be on the leading edge, not on the bleeding edge.

EL.Does your CIO deal with the board at all?

BG. He does to some extent, but he deals directly with our board's audit committee. He reports regularly on a number or things. He occasionally attends a full board meeting, but he regular attends the audit committee meeting.

EL. What have you learned from your CIO?

BG. He is a very calm, methodical, good thinker who approaches things at a very high level. He has a calming effect on us all. I have enjoyed dabbling in technology. In fact, I have tried to be out front about the technology we deployed. When the Internet became in vogue, I remember our CIO telling board members at a retreat how the Internet would change business. What he said motivated me to take a more hands-on approach to technology.

EL. What important technology investments did you make during your tenure?

BG.  We made numerous technology investments. After I became CEO, we made one of the most massive investments in our company's history. Our joint project with IBM, called Express Processing, was a massive effort to automate all of our systems. We went from 100 percent paper driven, or process driven, or telephone driven to almost 100 percent Web-based processing. The technology also allowed us to establish remote processing offices around the country. As a result, we could enter cases immediately into our system as we received them, and then we could move them instantly to one of those processing centers for adoption. That's was our greatest technology investment.

We also took our basic pension system and we replicated it with a version that had international values. PIIS or the Principal Insurance Information Systems is our standard, global defined-contribution record keeping system. If we go into a new country, we can plug in this adaptable system. We made some changes for language and regulatory purposes.

EL. If you were to look back at your career, what is the one thing you would have done differently?

BG. I don't spend much time looking back. Some of my decisions did not pan out as we expected. A large acquisition we made in Australia turned out to be a bad move. We eventually sold that business. We have stayed in some businesses longer than we should have and have gotten out of some too soon. We have tried to learn from those mistakes. We always do look-back analysis to determine what we did wrong and how we can avoid making the same mistake.

EL. Can you tell me a story about a professional adversity you had to overcome?

BG. In 2001, we were in the process of going from a mutual company to a publicly traded company. We had been working on the IPO for several years. On Tuesday, September 11, 2001, we were in our hotel room getting ready hold a briefing about our IPO. Of course, 9ll happened. We stayed in Paris until that Friday. We fly from Paris to Reykjavik, Iceland, where we spent the night. We then took a plane to Winnipeg Canada, where we rented a van to drive to Des Moines. A few miles after we entered the United States, we had a terrible accident with the van. Although we all had some sort of injury, we managed to regroup and make it to Des Moines. On October 23, we became the first company to go public following 911.

EL. Now, can you give me a more personal vignette about what you learned from an adverse situation?

BG. My parents got divorced when I was very young. My father was an alcoholic. During the last part of my MBA program, my father committed suicide. My brother and I had to deal with that horrible situation. Unfortunately, my father died with no life insurance. He left a small business ridden with debt. My brother and I took out loans to help my family move forward. Because of this experience, I decided to pursue a career in life insurance. I did not want to see families go through a situation like mine, if they can avoid it.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

Jack be nimble, Jack be quick, Jack jumped over the candlestick. You might ask: "What does a children's nursery rhyme have to do with IT." It sums up what companies now look for in senior IT talent. Shawn Banerji, managing director of Russell Reynolds Associates' global technology sector, says, "Today's CIOs have to be agile enough to react to unexpected situations or challenges without getting burnt." Banerji's firm is one of the oldest executive search firms specializing in recruiting CIOs for clients such as General Motors, Hewlett-Packard, and Toyota. He says, "We have done several hundred CIO searches. In 1996, we recruited Ralph Szygenda away from Bell Atlantic to become global CIO of General Motors."

While at the MIT Sloan CIO Symposium 2009, enterpriseleadership.org sat down with Banerji, a speaker at this venue, to talk about job prospects for CIOs and their direct reports. Banerji has been with Russell Reynolds since 1999. Here is what he had to say:

EL. Can you explain how your firm works?

SB. We are one of the oldest retained (contingency) executive search firms in the country. Client companies pay us to help them identify, assess, recruit, and retain qualified talent. About two-thirds of the candidates we source currently hold executive management positions. Their employers recognize

the value they provide to the organization. We use our network to go after these candidates and then introduce them to our clients' opportunities. About one-third of the candidates we source are proactively looking for positions and have reached us through their own network. If these people meet our clients' criteria, we will engage with them about our recruitment process. Unlike some firms, we don't shop candidates' resumes around to multiple companies. We recruit for specific positions and get paid if the client company hires one of our candidates.

We operate with the C-suite. For technology, we recruit mostly CIOs, CTOs, and their direct reports, such as a vice president of applications, a vice president of infrastructure, a chief enterprise architecture, or a chief security officer. We don't touch the layer below these executives.

We deal with some of the largest companies in the world. We also recruit for privately held companies with anywhere from $100 million to $400 million in revenues.

EL. What is the corporate attitude right toward IT?

SB. We see two schools of thought evolving. Some organizations value IT more so than ever for two reasons: governance and efficiency. These companies say, 'I need to do more with automation and efficiency in my business. How do I drive my operating model to a shared service model? How do I automate all of these manual processes so I can cut some of my staff?' When it comes to governance, organizations need to have a more transparent view of what is happening inside the company, especially within the critical business lines, such as finance. It is not enough for the right hand to know what the left hand is going. The fingers on each hand must work in concert. Companies need to have strong IT leaders who know how to upgrade and will continue to invest in the existing environment.

EL. So, what kinds of IT leaders are companies looking for at this time?

SB. Companies are looking to turn people over and go after transformational leaders who can demonstrate the business impact of IT. Companies don't want IT managers of the status quo. For example, CIOs have historically measured themselves by two primary criteria: head count and budget. How many people work for me and how many dollars do I control? Those metrics determined the importance of the CIO's role and contribution to the company. Companies have turned this around by creating a new paradigm of the business information officer. This individual aligns better with the commercial interests of the business. This individual focuses on governance, as well as operational efficiency, and knows how to drive that kind of change in a meaningful, substantive measure. That individual does not look at headcount, but focuses on business contribution. He or she looks at their role in setting the company's governance policy. Creating business value by leveraging existing resources is another key area for a transformational leader focuses. How do I do a better job of selecting and managing key vendors? How do I free myself up from running the daily operational aspect of IT and contribute more to the senior leadership teams? A transformational leader strives to answer these questions.

EL. Are there reasons why a company might turnover its IT leadership for new players?

SB. I don't want to sound harsh, but some companies look for a new CIO because of return on investment. Not all companies value IT in terms of governance and efficiency. Many companies value IT as it relates to what the IT spend contributes to the organization. For example, if the largest line item on the balance sheet is technology, then the return on that technology investment better yield ways to increase revenues or to attract new customers. Some times, companies might replace a highly paid CIO with someone who makes far less. It's not worth paying something an exorbitant amount if they can't produce the kind of results the company expects.

EL. Are you dealing with many new CIO positions?

SB. We have a number of them in the pipeline. We went through a period where we did many new assignments for brand-name companies.

EL. Some CIOs leave positions with Fortune 1,000 companies to start their own consulting firms or to go work for a startup. They don't seem to rebound to where they once where. Is it hard for some CIOs to get back on the Fortune 1000 saddle again?

Some of these executives are in transition. Perhaps, they left on their own or were asked to resign. Many of these CIOs will have a hard time regaining the stature they once had for several reasons. Many of them are viewed as the archetype of that legacy paradigm of the CIO. Like the great generals of yester year, they commanded troops across large and complex global businesses. Today's organizations don't perceive these executives as nimble, fast-moving CIOs who can drive change through influence rather than by direct edict or mandate. Legacy CIOs have been empowered to drive change or to tell people in the organization what to do. Today's paradigm stresses collaboration and collegiality. CIOs need to lead by the carrot, not the stick. They have to convince and persuade business line managers and divisional CIOs who now report directly to business units, instead of the corporate CIO.

Some CIOs in transition didn't fall into the company's succession planning continuum. If someone has 30 or 40 years of IT experience, perhaps he or she did not mesh well with people coming up the ranks. On the other hand, some companies might want a well seasoned or a retired CIO who doesn't mind staying for a few years, grooming a successor, and then leaving. This happened at Chubb Insurance. Last year, a bank asked us to find a retired or a semi-retired CIO to sort out the current technology situation and create a succession plan.

EL. Do you see any consistencies with the backgrounds your CIO candidates possess?

SB. In the past 10 years, we have seen more diversified backgrounds, with a greater emphasis on business. We don't necessarily look for people who have a computational, engineering, or mathematical background. Instead, we look for people who are superlative business and process executives. These individuals know how to look at a business and understand where the opportunities exist and where to apply technology to create business value. For example, if a company manages technology more for cost than innovation, it will hire a CIO who understands finance. The CTO has become the be-all and end-all global technical executive who understands things like service-oriented architecture.

EL. Can you be specific about the competencies that companies want in a CIO today?

SB. Companies want someone who can apply technology to create more broad-based business value, but who also has expertise in another area such as sales or marketing. This individual might have an MBA or be someone who has run an operational business unit.

The majority of candidates we see have spent some time in areas outside IT of during their career. At some point, they decided to return to IT, either to head up a project management office or to do strategic planning. These roles provide a segue to take on broader IT operational responsibilities.

Ten years ago, we got more requests for consultants from McKinsey or Accenture. That has changed. Organizations want people who have owned the business processes and have accepted accountability for the results. Consultants don't operate that way. On the other hand, candidates who have been in consulting during their career usually have strong strategic planning skills, good project management skills, and good client relationship skills. We would consider candidates who have married this experience with corporate IT experience.

EL. What is your firm's formal process for screening candidates and what similar process do client companies follow?

SB. We use a very specific methodology called competency-based interviewing. It causes people to relive their professional experiences. It's analogous to drilling a well. For example, we might ask a person this question: Tell me about the time that you had to drive change across an enterprise and you got pushback from key stakeholders? Someone can easily give a theoretical answer to that question. Based on the answer, we might then ask: Who gave you the most pushback and why? How did you bring order to the governance process to win over this stakeholder? What concessions did both parties make to bring about a compromise? How were you able to demonstrate the business value of IT?

The more we drill through the answer, the more we learn about how the person handled the situation. If someone hasn't done what we ask about, then he or she is usually lost for words. You can't make this stuff up.

Our cadre of industrial and organizational psychologists helps us to evaluate candidates. Working with each client, we create an index of specific competencies, which we force rank. We interview against those specific competencies to develop a candidate assessment. The client company also interviews against the same set of criteria.

EL. Do you screen for whether or not the candidate fits the client's corporate culture?

SB. Yes, cultural assessment is very important to us. In fact, we recently rolled out a new tool called a cultural analyst. There is a rigor and a discipline in the science of assessing the competency of people to do the job. We marry these things into a very scientific rigorous process that provides a holistic view of this person. Although a candidate might have great skills, he or she might be a disaster because of the cultural fit. Conversely, a candidate might have most of the skills and competencies, but be a better culture fit than candidates with better qualifications.

EL. Is there any reason why you won't work with a qualified candidate?

SB. We've seen a number of candidates who have lied on their resumes. For example, some candidates will turn a one-week executive leadership course into an MBA.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.