CIO for Nokia			In 2005 John Clarke left Tesco, one the Global 100 largest corporations, to join Nokia and he also swapped hats from CTO to CIO. We set out to discover what the future of corporate IT looks like through the eyes of someone who has changed seats, from a major user organization to a leading technology vendor. John Clarke was interviewed by Gartner Fellow Mark Raskino in London, UK on 29 June 2006 Gartner: John, your last role was CTO at Tesco. Is that correct? John Clarke: Actually, at Tesco, it was called the "group technology director." Gartner: And your new role is CIO at Nokia? Clarke: Yes. Gartner: We see some confusion, at the moment, about the most senior IT positions, reporting lines, and the future of the CIO. I wonder if you could contrast the CIO and CTO, the essential differences between those two roles as you see them now — and perhaps going forward. Clarke: My last role was as a CTO and chief architect, with a strong focus on system design, solution design and technology choice. In the CIO role, my additional focus is on how to extract maximum value from these systems designs and solutions and align these with the strategic and operational business goals, which nearly always requires a far greater understanding of business process. It is usually in this last area where you see the bigger differentiation between CTO and CIO. In addition, the other area that CIOs must take full accountability for is the development of IT leadership, rather than purely technology leadership. Gartner: I've recently heard it suggested that chief executives themselves are getting more savvy about what technology can and should do for the business, and perhaps even getting involved with some of the relationship building with the major providers, particularly for business process outsourcing (BPO). Maybe that diminishes the need for a CIO and suggests you can get away with having a chief executive plus a CTO? Clarke: Today's CEOs looks to gain competitive advantages from company assets, which include technology and information. They look to the CIO to assist in this task. If the company is a pure technology provider with little use of the associated information asset, then it may well be the CTO who does this. If information is a key asset (such as customer insight), and there are significant operational drivers, like productivity and sales growth, then the CIO is likely to drive these efforts. Gartner: We have seen companies buy and install technology, and believe that change will flow from it, but in fact, the change hasn't been automatic. There needs to be some strategic business change management. But it's sometimes not clear who should own that. Do you genuinely think the CIO can move forward into that space, or is it someone else? Clarke: I think you're right. A number of "IT failures" are often a result of a bigger system failure, where that system includes process, organization and technology. We do have technology risks, and sometimes projects do fail due to a technical limitation. But I would say that the majority of failures or projects delivering below expectation are more than likely due to issues of process, organization or cultural design not being implemented. I feel that the IT department is expected to perform "magic" - "implementing a system that will overcome organizational boundaries and poor discipline." Sadly, these results cannot come about as a result of a new IT system. So what often happens is the IT department is found guilty of not delivering the change, and the failure to achieve the desired results compounds the poor perception of IT. So, should the CIO address the bigger transformational change, as opposed to just the IT part? Well, I see no reason why it shouldn't, except that it has to recognize that the skills required to achieve this are not those normally associated with the IT department. If nothing else, the thing that excites me about my job is the role of IT in strategic business change and innovation, and in understanding how organizations and people really work. How do things get done within a company? How do social networks really form? What is the flow of information? Five or 10 years ago, it was very much: Capture what you're doing today, and try to automate that. But what you were automating wasn't really what was happening. Therefore, the net value was not realized. Now if we start thinking more about the social context of how people work, and collaborate, and think, and share emotional experiences, then I think we're onto a better track. But this is somewhat new territory. Gartner: It's very different - from engineering or computer science. Clarke: That's right, because as I look at great examples in industry, I think, "Why not in IT?" Look at a Procter & Gamble, for example. It says to itself: "We're a company who says design is important to us." What we're all actually doing at the senior level is saying we're designers. We're designers of the company. So is the CIO really the corporate information designer? The question is how to design a company to maximize its information capital. And if you think about the concept of design schools, it's about being far more free-form and free-flow in developing innovative solutions. Gartner: Innovative? Clarke: Yes, in terms of thinking very differently about doing things. And that's what's starting to happen. What is the equivalent of design school for the IT community? What kind of skill sets will the IT leadership team need? How do you orchestrate ideas? How do you tap into people's emotional experiences? How do you get the IT department to act like designers? Gartner: I see exactly where you're going. Would you anticipate a future IT function having lots of psychologists, anthropologists and sociologists? Clarke: IT designers will come from all walks of life and all disciplines - psychologists, anthropologists and sociologists. So long as they deliver results, there should be no restrictions. Gartner: Okay, let's follow the customer thread and return to the social dimension later. I think I saw in the Wall Street Journal recently the suggestion that Tesco is going into North America - using Club Card as the secret weapon. Tesco is world-renowned for its loyalty program, which allows a very large company to have a very detailed relationship with individual consumers. But at this point in the evolution of Nokia - or indeed, its immediate competitors in the same mobile telephony space - the relationship between the provider of the equipment, the manufacturer of the phones, and individuals seems to be a lot more anonymous than that. Do you see that as something that might change, or would need to change? Clarke: One lesson from working at Tesco, and the same lesson now being seen in the Web 2.0 world, is that no one owns the customers. Customers decide for themselves what to buy and where to buy it. No matter how much we may think we "own" customers, they make their own decisions. So let this simple fact drive our behavior and ensure that companies do not get complacent. In the mobile industry, there is a greater focus now in trying to understand the lifetime behavior of customers. This is a challenge in the mobile space because channels to customers vary. Customers have typically bought mobile phones from operators. However, there is a win-win-win potential here, for customer, operator and manufacturer. By better understanding the services that the customers want and use, both operators and manufacturers can develop new solutions (products and services) that better suit these requirements. Gartner: Let's center on innovation for a minute. Innovation comes from interaction with customers, but aren't IT departments locked away, essentially in a back office, hidden away from any real customer interaction most of the time? Clarke: Sometimes, but yet again, I think it is a perception thing, and related to how you position the importance of IT or technology within your company. IT is an asset and one that can add value if you bring it closer to the customer. Think about how the airline booking industry has changed and how we now sit at our desktops and select flight routes, seating and food. This is changing the degree of intimacy between the airline and the passenger, all as a result of taking technology out of the back office and putting it onto the desktops of passengers. So IT can and should get more involved with product development. In Nokia, this is called Nokia for Nokia (N4N) where, as you guys tell us, we "eat our own foie gras"* - which is very important, because it helps us understand what it feels like from a customer point of view to use our products and services. And it's great when you can share that story with customers, especially in the enterprise space, because they know you have tried to look at potential issues from their perspective. [*Sometimes, IT vendors speak of "eating their own dog food" - that is, deploying their technology inside their own businesses. The luxury French duck pate "foie gras" is perhaps a better analogy for those selling a quality product.] Gartner: A lot of IT leaders have found it very easy to identify and measure things that are cheaper; - but some of the other things you focus on - like 'simpler ' and 'better', sounds seem harder to measure. Clarke: : I don't think there's been an appropriate maturing of the mathematics or the financial tools to measure these things. And you're right. In the past, IT has somewhat failed here, and can be partially blamed for coming up with some very silly, totally ambitious numbers on productivity that you just know are not feasible - business cases that show benefits such as a saving of 2.5 minutes a day of each person's time, times five days a week, times 52 weeks a year, and therefore, that's real savings. Well, no it's not - because if you're saving 2.5 minutes a day, I'm not going use that time for something else, really. But if you save me four hours in a day, and do that every day? Well, yes, that's a real saving - because in theory then, perhaps you only need half of me, rather than a whole me, and I can do another part-time job. So I think there are some people in this industry who should feel very embarrassed about that kind of business case. That has caused a lot of heavy criticism of IT, and rightly so. But there still could be a better way to measure value. We could consider measuring enablement. Help a sourcing manager source new products with the right information. Now that's not a benefit we claim today, but the benefit there is helping that sourcing manager do more work and do it quicker. If they save $20 million over two years by using better systems and information, that's a benefit. The typical challenge here is who claims the benefit - sourcing or IT? Gartner: Where do you think, as an industry, we stand right now in the eyes of business leaders, in terms of our collective value proposition? Clarke: It's a good question. We are generally getting better at defining our value proposition. However, the main issue is not in defining it; it is in delivering the actual result. Our value proposition must be and can only be delivering results. This requires one to consider that IT is only one part of a corporate ecosystem, and most systems do have a limited capacity to absorb change and create value. So to really achieve value, we must combine systems change and process and organizational renewal. I still see this as an area for development. As such, a number of IT departments are doing too much development work and not enough change management and deployment. So if we doubled their yearly budget right away, would you double and quadruple the benefit? I don't think so, unless the capacity of the organization to absorb change was sufficient. As such, there is a finite limit on how much to invest in IT. Gartner: When we look at the future of the IT department, we think people are starting to change what they do. There's a stronger focus on enterprisewide information management and enterprise information architecture. And there's also a big rise in interest about business process management. The department that you run is not called "IT" - correct? Clarke: Yes. Gartner: It's called Business Intelligence? Clarke: Actually, it's Business Infrastructure. But I think it could be called Business Intelligence, so it's a good Freudian slip, or Business Process Intelligence. Basically, we're in the business of supporting or enabling decision making and changing processes. Gartner: That's important; your emphasis is different from what we see in some other places. Many people are trying to solve business problems deterministically - if we only work harder with more analysts on more procedural, sequenced flow diagrams, it will all work out. But your emphasis seems to suggest that there's another leg to the stool. It's not just about vast data warehouses; it's not just about processes. There's also a need to allow people room to evolve things themselves. So Web 2.0 is about groups of people evolving things themselves. Clarke: Yes. We are very good at doing this. We have major global processes that we have developed, and they're exactly right for what we need to do with our business. They let us do our business in a very efficient fashion. Right now, we are exploring Web 2.0 technologies to help us explore if there are simpler ways of doing things, with the need for predetermined processes. But a process sometimes doesn't cover the entire world in which you live. You have to evolve around it. I think people need to have a degree of common sense around utilizing the appropriate process at the appropriate time, as well as being able to do other things - identify smart ways of achieving it. And the challenges I face - and the good challenge for a CIO - is how to provide this ecosystem that lets people extend like that. We call it Nokia 2.0 - how we provide a similar experience, where they can mesh together applications and data to try out different things. Helping enable this change is driving us to an environment where we can bring things together, and experiment and try out. And people learn by experimentation. That's the lesson of Web 2.0. And what we are asking is - what is the Nokia 2.0 or even 3.0? Gartner: I think you said to me before that you've been blogging inside Nokia since you joined. Is that correct? Clarke: Yes. Gartner: And when you talked about Nokia 2.0 vis-à-vis Web 2.0, these are very open perspectives. But think for a moment about the nature of consumer electronics - for example, Apple and the way it relies on extreme secrecy as part of its marketing strategy right up to launch day for new products. This whole organic, build-it-yourself, evolve-it-yourself perspective challenges your ability to maintain lots of "firewalled" little compartments inside the organization, hiding secrets from one another. Doesn't it? How do you see that tension within an industry that needs to invent new things? Clarke: There is tension. Hopefully, it's a healthy tension. We do operate in a very intense industry, where new products and services are continually going to market, and quickly. So we need to maximize the strength of the company, to make people collaborate, and share and innovate. So this is the tension you want, in my personal view. The environment should be very open and very collaborative, where you can seize upon great ideas across your company internally, without letting your competition know what you're up to. So trust is paramount. Gartner: I wanted to ask you just at the end - who do you admire? When you look across at other companies that you see that have really done impressive things with information technology in recent years, which ones spring to mind for you as being exemplary? Clarke: Capital One I find very interesting, in terms of its investment in understanding that information is king, and using information to create analytical models around what your products and service could be. Terry Leahy, the CEO at Tesco, had the imagination and ability to recognize you could use customer data to build loyalty. So creating Club Card is a great example of how IT helped Tesco in its growth plans. I am sure there are others, and of course, any company that pays CIOs a large salary must surely be admired for having greater insight. Gartner: John - thanks very much for sharing your thoughts with us.