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Organization Transplant Claims Another Victim

How a New CEO Affects the CIO

A few weeks ago I ran into a CIO I hadn’t seen in a few months.  The last time I had seen him we talked about his job situation.  The CEO he worked for had just been replaced, and the CIO and the new CEO were butting heads.

This situation is pretty common and takes place all over the world.  A new CEO is brought in by the Board of Directors.  There’s a reason — usually it’s an attempt to take the company in a new direction or to pull the business out of a slump.  The new CEO knows that she only has a few months to make a difference.  That’s because after the first six months the board will begin to have second thoughts and will give the new CEO a tighter leash.

Two Approaches for the New CEO
Put yourself in the position of the new CEO.  What do you do?  There are a couple of basic approaches:

  1. Problem-Solving: Figure out what’s wrong, then fix it.
    This is a logical approach to improving the business but it demands patience and steady nerves.  You’re going to need to talk to key customers, key employees, and anyone you can find who can give you an impartial opinion.  The evidence will conflict.  There will be a lot of finger-pointing.  You will hear a lot of “noise” — negative comments about things that are working well and positive comments about things that aren’t working.  A high level of judgment will be required, but if you can gain focus on the key issues, then you’ll be able to take clear, decisive action to solve problems quickly.  This approach is like diamond cutting; it requires a lot of study and then nerves of steel when making the change.
  2. Organization Transplant: Replace the old organization with a new one that’s worked for you before.
    This is a more brute force approach.  It doesn’t require great intellect or very much study.  The concept is simple.  You’ve run a similar organization before, and you have a list of people who have worked for you in the past.  When you’re hired into a new CEO position you just bring in your own people for all of the major roles.  You superimpose your previous business culture on the new company.  You discard all of the top-level executives reporting to the old CEO and replace them with people from your list who have worked for you in the past.  They run the new company exactly like they ran the old company you both came from.

Which Approach is Better?
I guess it depends on your point of view.  The Board of Directors want a change, and either approach will lead to a change.  The Organization Transplant approach will probably produce faster results if — and it’s a big if — the new transplanted organization is actually appropriate for your business.  But there’s a catch: the kind of organization that can be transplanted is usually bureaucratic and mechanical.  You can transplant a heart but not a soul, and an organization transplant tends to snuff out the cultural spark that may have existed in the company prior to the transplant.

On the other hand the Problem-Solving approach, when it’s successful, is able to save the existing cultural spark in a company and focus that spark in a new direction.  Problem-Solving removes the things that were preventing the spark from growing, and fans the existing sparks into bright flames of growth and development.

So the choice of approach comes down to the question, “Is there something in the company worth saving, or should we just overlay the company’s culture with a new one?”  And if we choose the latter approach, what donor do we use for the transplant?


What if this happens to you?

Put yourself in the position of the existing CIO.  You get a new boss and you obviously want to make a good impression.  You also want to keep your job.  What do you do?  Regardless of the approach your new CEO will take, you need to clearly communicate three messages to the new CEO:

  1. You’re on top of what’s going on in your company. You know the business inside and out, you understand the business processes that are being used throughout the company, and you know where the best opportunities are for improvement.  Make the new CEO believe that he would be a fool to bring in someone else for your job – you’re just too valuable.
  2. You’re willing and eager to alter your IT strategy to fit the new CEO’s interests. You’re not a problem for the new CEO – you’re an asset.
  3. You understand and acknowledge the weaknesses of your current processes, systems, and infrastructure. You know why there are weaknesses (e.g., lack of budget emphasis), and you’re eager to fix them.  You accept criticism as a way of identifying opportunities for improvement.  You’re not someone who will fight progress – you’ll be an ally in the battle.

What’s the result?
All you can do is your best, but you’re not in control in a situation like this – the CEO is.  In the case of my friend the CIO, his Board of Directors chose  the Organization Transplant approach.  He made a strong effort to communicate with the new CEO and help solve the problems facing the company, but it wasn’t enough.  He’s being replaced with someone from outside, as are many of his counterparts in other business organizations.  Will his company survive?  We’ll see.  But one thing’s for certain: the company’s soul will never be the same.

Comments on this entry are closed.

  • Bryan Schueler May 25, 2009, 10:34 am

    Excellent points here Harwell, I think we’ve all seen CEOs select one of these methods or the other. I think you’re right on to suggest that the CIO work to gain an understanding of the priorities from the new CEO’s perspective and show willingness to make modifications. Often too much time is spent on selling to the new executive why the operation is where it is and why it is best to continue the current course given current resources.

    I recently saw a person forced to “resign” because he was too stubborn to stop selling his plan.

  • Jeff Staddon May 29, 2009, 1:22 pm

    In either #1 or #2 there will be a lot of turnover. #1 because people will reject the change when it comes. #2 because they are pushed out before the change. #1 seems more socially responsible and I think has the largest upside potential, but that’s just my opinion.

    • Harwell May 29, 2009, 3:08 pm

      Thanks for your comment, Jeff. Often it’s not a choice that the new CEO makes — the Board of Directors makes the decision when they pick the new CEO. It’s kind of like deciding what to do with an old car: do you try to fix it up, or do you just replace it? Certain “serial CEO’s” (moving from CEO job to CEO job) are known for replacing organizations. Often they just move the same underlings from company to company. It provides some improvement in the stock price of the company, but most of the positive effects are just temporary. When the CEO moves on to the next company in need of a replacement, the company left behind is often worse off than when the CEO arrived.

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