From CIO to CEO – What It Takes and Why It Works
All businesses are becoming software businesses. It doesn’t matter what industry you’re in or what size company you are, software is a critical component—a foundational element. Couple that with the emerging trend of applying Agile software development principles to business development, and it’s easy to understand why CIOs who aspire to be CEOs—a career path that’s more common than you might think—are able to make that leap successfully.
There are actually quite a few points of commonality between the CIO and CEO roles. There are also some very distinct differences. I have personal insight into how and where they overlap and diverge because I’ve made this transition myself. From CIO at New Relic, Inc., I took on the CEO role at Airware. Today, I am CEO at Puppet, a company that provides infrastructure automation and delivery solutions that enable teams to more securely scale the software that powers everything around us.
It has been an interesting journey with its share of challenges and many rewards. Through the process, I’ve come to understand a great deal more about why the CIO-to-CEO path makes sense and what someone attempting to walk it can expect along the way.
With technology becoming a more and more central part of any business, it’s not all that surprising that the right CIO can become an excellent CEO. And, if you dig beneath the surface, you’ll quickly realize that there are many core CIO skills and areas of expertise that are directly transferable to the CEO role.
CIOs get the big picture.
To perform their job well, CIOs need to have an inherent understanding of how all the functions within a business work. While CEOs aren’t expected to be experts in everything, they are expected to understand at least the basics of how things work across different business functions—where things intersect, and how workflows operate across a company. Having the CIO’s bird’s eye view allows you to think more critically and effectively about how to drive efficiency, agility and speed within your organization.
CIOs know how to leverage technology effectively.
And, because CIOs are technologists, once they have identified how to drive efficiency, agility and speed, they also understand how to leverage technology to facilitate the processes that will achieve their vision. The combination of insight into what needs to be done and the know-how to make it happen is very powerful for driving change and growth.
CIOs are used to doing more with less.
CIOs are always working to get rid of tech debt, and keeping a close eye on how much is going into tech debt versus how much is going into other functions. They are responsible for reviewing many more business cases than the budget can possibly accommodate, so they are used to having to do the hard job of picking priorities and dealing with disappointed parties.
CIOs are able to apply Agile concepts to business development.
Finally, a CEO who used to be a CIO is well positioned to take full advantage of applying Agile concepts to build and grow a business. The Agile approach has been thoroughly proven in the software development sphere, and now many companies are successfully using the same concepts to create a whole new and very modern approach to business development. A leader with CIO experience can maximize the benefits of this opportunity in a big way.
As you can see, from financial budgeting to operational processes to big-picture company vision, there is a lot of crossover and opportunities for cross pollination between the CIO and CEO roles.
All that said, there are some things that are very different between these two roles. Primarily, they have to do with a greater depth of responsibility.
Maybe the biggest CEO-specific responsibility is defining and holding the company culture. While vision and fundraising are obviously important, I believe that establishing and nurturing the culture of your organization is the number one thing a CEO can influence. And the smaller the company, the truer this is. As the CEO, you own the culture—who you hire, who you fire, which behaviors you reward and which you discourage. And as the CEO, everything you do is a reflection—intentional or unintentional—of the values underlying your company culture. Everything you do and say, everything you don’t do or say, every word you write, who you meet with and who you don’t meet with. All those choices affect how people perceive the culture and values of the company. So, it’s critically important to be very thoughtful about those choices. Know what kind of culture you want to create and be aware of how your actions help build that or detract from it. This responsibility is ultimately so much bigger and more important than any other function in the company. It is the company.
As a CIO, you partner with different people to help develop and cultivate their vision based on their specific goals and objectives. As a CEO, you are the person who is driving all of that for the entire company. You’re looking not only at what you’re doing this year, but for the next three to five years and you are doing this in an ever-changing market where predicting what the future will look like more broadly is part of your day job. Internally you’re not just looking at one functional area; you’re looking at the entire organization and how all the pieces will fit together. This can be a pretty big shift in perspective.
On the money side, the CEO is doing more than simply allocating money on tech investments, which is typically the primary financial responsibility of the CIO. At the CEO level, you are responsible for everything from ensuring you have the right business model to scale the company to fundraising to managing earnings calls. It’s a broader and longer game when you’re the CEO. And, obviously, there’s more at stake.
And that’s kind of what all the differences between the CIO and CEO roles boil down to: bigger stakes and the overwhelming sense of responsibility that comes with them. It’s an honor that comes at a cost. While it’s great to be able to make all the big decisions, the consequences of those decisions are ultimately your responsibility and can weigh heavy on you. At my current company where I am CEO, I am responsible for the livelihoods of 500 people, many of whom had been with the company for many, many years. I know them personally. They are trying to put kids through college, buy a house, buy a car. And their dreams depended on the performance of the company. But, no pressure.
And, for better or worse, the CEO’s responsibility is largely something that must be borne alone. CEO is an intense job that will teach you the meaning of the saying, “It’s lonely at the top.” As CEO, you’re not a peer of the executive team (they all work for you), and you’re not a peer of the board (they advise you and can fire you). You’re in a unique position of power, which can be very rewarding, but also very taxing.
The last factor to consider in a transition from CIO to CEO is what I call the “Hotel California” factor. When times get tough (and they will) you realize there’s no easy out. You have to go in with a high level of commitment because—unless you’re fired—there’s no simple exit plan for a CEO. So, you need to be all in on believing in and delivering on the company vision. It’s not that leaving is impossible, but it’s definitely complicated. If you take a CEO position, you need to be in it for the long haul.
The CIO Advantage
We’ve covered the crossover points and the points of differentiation between the CIO and CEO roles. But what about the things that give a CIO a specific advantage as a CEO? For a software company, there is a tremendous amount of value having been a CIO working in a technology company that sells into the CIO function, or even the VP of Infrastructure or DevOps team. That experience is really helpful when it comes to understanding the fundamentals of how companies buy technology, information that can come in very handy for a CEO.
Relevant messaging can make or break the sale. As your company grows and scales, your product becomes a bigger-ticket item for your customers. As your offer evolves, you need to make sure your messaging evolves as well. Whether you’re selling directly to the CIO, into their department, or to a broader base of users within the company, as the average size of your deals increase, you need to be able to articulate your product’s value from the ground level all the way up. This can be especially challenging for startups that are still focused on feature/function messaging. That approach works fine for the end user, but as you take your pitch up the food chain, you need to be able to demonstrate broader, company-wide value and help people who are not “hands-on keyboards” using the technology understand and appreciate its power as well.
A CEO who understands the pressures of the CIO role first hand will have a solid understanding of a company’s absorption capacity. So much is changing in corporate environments these days, and the reality is that you can’t change everything at once. This means that sometimes, there’s just too much going on for a customer to get a deal done. They may not have enough resources, or they may not have enough time in their own schedule to pull off a new implementation or integration, no matter how much they love your product. In cases like this, the CEO who has been in the CIO’s shoes will know to respect that situation and won’t try to pressure a customer into a deal when the timing just isn’t right. Reality is that you can push a sale, but you can’t as easily push implementation and adoption. If they don’t use the technology, they won’t renew the technology so in the long run, it will be a loss. Hence, while it can be hard, that restraint can be crucial to salvaging the relationship for another day.
You’re never going to “own it all.” If you try to control everything with a product that is too closed and too proprietary, you’re going to get rejected from the system. Any CIO knows the importance of being open, connected and able to integrate into other solutions. This is particularly true in complex enterprise environments where a company has already made substantial investments in infrastructure and other technology. They want something that is complementary—that plays well with others. This is why API-based architectures are so popular. They make life easy by being open and connected. This is a big core value of ours at Puppet. Our products leverage open-source projects, and we’re continually cultivating those projects as we strengthen the open-source componentry our commercial products are built on. It’s important to us to deliver value on both sides so that we can provide a solution that works for as many people and organizations as possible.
Distinct Roles with Valuable Crossover
In today’s technology-driven markets, it’s not surprising that these two roles are converging. Based on my personal experience and what I’ve seen throughout the industry, it’s clear that if we were to create a Venn diagram of the CIO and CEO roles, there would be plenty of middle ground between the two. Both roles are critical to any organization’s success, and while they are not interchangeable, there is certainly a clear path to transition from CIO to CEO in a way that can deliver tangible competitive advantages. So, if you’re a CIO looking to move up into the top position, don’t sell yourself short. And if you’re a member of a board looking to hire a new CEO, don’t overlook the opportunity to harness the transferrable skills and strategic strengths of a world class CIO.
As you race to close the books on 2019, it’s worth stepping back and considering what the future will hold for B2B software. OpenView’s experts weighed in with their predictions across product, sales, marketing, pricing, corporate development and talent.
Your board is only as good as the sum of its members. We interviewed a few experts and asked about important tips to keep in mind while looking for your board’s next independent director.