While currently a rarity, the number of CIOs getting the top job is likely to grow as the importance of IT and digitalisation increases, finds Sooraj Shah
There was a fierce backlash towards Isabel Rutland, the co-founder of luxury lifestyle website Discover&Deliver, after she claimed that CIOs and CTOs didn't have the right skills to make the transition to CEO.
Rutland had hired former Net-a-Porter CIO Richard Lloyd-Williams as the company's CEO back in 2014, but along with her business partner Stephanie Mahl, decided to let Lloyd-Williams go in June. Lloyd-Williams' stint wasn't successful, and it followed the more high-profile failure of Philip Clarke at Tesco, where had also made the leap from CIO to CEO.
A recent global survey by customer experience solutions provider Amdocs revealed that senior service provider executives believe that CEOs in 2020 will most likely have CFO qualities, followed by CMO qualities, then COO. CTO ranked fourth and CIO leadership qualities ranked seventh.
But CIOs who want to be CEOs have reason to be optimistic. Computing has spoken to several CIOs who have made a successful transition to CEO.
Take David Yu, who became CTO of Betfair in 2001 and was promoted to CEO in 2006.
"David was very successful, he led Betfair to massive growth and it eventually went to the stock market for $2bn, and that's an absolute case in point of how [the transition from CIO/CTO to CEO] can work," says Rorie Devine, who took on the CTO role at Betfair and reported into Yu.
Devine has followed in Yu's footsteps: after leaving Betfair he held several other CIO/CTO positions before becoming CEO of TeamCXO.com, a network of interims who help CEOs, CIOs and CTOs deliver their change agendas.
Andrew Rashbass is another IT chief who has become a CEO. He was IT director at the Economist, before becoming the CEO of Economist.com, then chief executive of the Economist, and most recently chief executive of Thomson Reuters media arm Reuters. Now he's executive chairman of DMGT-owned Euromoney.
In the US, many CIOs have moved into vice president or CEO roles, such as Guy Chiarello, who moved from CIO of JPMorgan to president of global payment tech firm First Data, and Kevin Horner who was CIO of Fortune 500 firm Alcoa, and became CEO of IT staffing firm Mastech.
Given these success stories, why is the CIO-turned-CEO still such a rarity?
When Rutland said that CIOs couldn't make the transition to be a CEO, she suggested that it was because CIOs were too inward-looking and reticent.
"I think that CIOs tend to be by nature introverted people, that's not to say introversion is a bad thing, but they are people who tend to like working in very small groups or on their own; you become a coder because you like to work by yourself, it's not a team sport," she said.
"I think I probably wouldn't find [CIOs or CTOs] with the right human characteristics and dynamism that you need, especially in a small business. [Staff] have to love you, they have to follow you - and you have to have a tremendous amount of leadership character to be able to do that," she added.
Devine says this is "a ridiculous generalisation", while VMware CIO Bask Iyer believes people who haven't actually done a specific job for at least five days should refrain from forming any strong opinions about it.
"CIOs are fabulous leaders, they speak well, they are good business leaders - so I don't know why there is still a stereotype of a geek in the business, that stereotype has to be broken," Iyer says.
Devine believes that in the UK in particular there is an outdated way of thinking about people who work in IT.
"We almost demean it and devalue it - people are happy to say that they don't have technical skills," he says.
But these IT, technology and digital skills are vital in many organisations, particularly as a large proportion of firms are working on major digitalisation projects - Computing has spoken to the CIOs of Atkins, Specsavers and Virgin Active who are all doing just that.
As group CIO of engineering firm Arup, Stephen Potter says: "There will be businesses which will be transformed by digital where there is clearly an opportunity [to be CEO] for someone who has a tech background."
Virgin Active group CIO Andy Caddy agrees.
"Traditionally, the leap from CIO to CEO was a chasm that was difficult to jump; being a leader of a technical service function rarely prepares you to run the entire company. However, as we see the move to the new digital CIO, the good ones should see the opportunity of being more business focused and in fact being one of the few influencers of change across the entire company. In this new world, CIOs should have better opportunity to move around senior positions and even into the CEO's seat in some situations," he says.
However, as VMware CIO Iyer notes, not all CEOs or companies are giving enough importance to IT. Instead, they rely on external consultants to digitalise their companies or automate, rather than talking to their internal employees about how to get it done. Again, this is about changing the perception of the executive board.
But what, if any, skills are CIOs missing in their repertoire?
"CIOs are not used to being the external face of a company, or having to create the culture of the business," says Alan Mumby, of executive search firm Ogden Bernstein.
"It is rare that CIOs have that accountability, or even a particularly strong influence - so there are certain things that CEOs have to do that CIOs don't, and therefore aren't well-equipped for," he says.
Mumby believes that there will only be a slight increase in the number of CIOs who make the shift to CEOs, but that each CIO will be judged differently. He says that Tesco's Clarke and Euromoney's Rassbash had very different characteristics, for example.
Arup's Potter says the main pieces missing from a typical CIO's artillery are "sales, marketing and interaction with the customer".
And Adam Turner, managing director at executive search firm Norman Broadbent, agrees.
"CIOs have to develop their careers in different ways, whether that's getting an MBA, running business lines, sitting in the marketing department, getting a financial qualification or understanding P&L, but also in their own environment getting more exposure to other bits of the business," he says.
Indeed, some CIOs have gone out of their way to acknowledge this. First Utility CIO/CTO Bill Wilkins says he has spent a lot of time thinking about opex versus capex and how internal costs affect overall strategy, in addition to acquiring other financial skills.
Picking up skills is one way a CIO can prepare themselves to be a CEO, but Mumby believes that time will also play a part in CIOs being considered as worthy candidates for the top job.
"The more the world relies on systems that are deployed by CIOs, particularly replacing business processes with digital solutions, and interacting directly with the customer, the more influential CIOs will be and therefore the more likely they are to earn the respect of their peers," he says.
So how many CIOs have the right skills, right now?
According to Turner, only 15 to 25 per cent of CIOs in the FTSE250 have the skills to be an effective business leader, and therefore can move on to a COO or CEO role. He says that the COO role is usually a "holding role" until CIOs can become CEOs, and that CIOs are also moving to CDO roles, which may also give them more of a chance to become CEOs.
News UK's Chris Taylor and US digital agency Marquette's Duane Anderson are two CIOs who made the shift to COO. And Arup's Potter says the CIO to COO jump is "much more likely" than switching straight to a CEO role.
"It's something I may look at myself at some point," he states.
But VMware's Iyer suggests that CIOs shouldn't make the move to COO.
"That's possibly the wrong step, in my opinion, because it seems to further emphasise the fact that you're good with operations, and the CIO is really more about the fact you're good at other things, so somehow the ‘geek' bit translates to more operations and a lot of us get that [added] responsibility," he says.
"I have started saying no to [operations responsibilities], it is very difficult to say no but I have deliberately started saying no," he adds.
BT Global Services CEO Luis Alvarez is another example of an IT leader who has successfully climbed to the top, having previously been CIO at Santander Group. He believes CIOs who want to make the same leap should first take charge of a business function - in his case he was director of electronic banking at Spanish bank Banesto.
VMware's Iyer believes CIOs who want to become business leaders might have more luck by targeting smaller businesses.
"The best way to break the stereotype glass ceiling is to give up your job. [The CIO role] is a very ego-satisfying kind of job where CEOs of tech vendors are calling you, but the best way is to join a smaller company if you feel really strongly about it," he suggests.
But do all CIOs even want to be CEO?
"Some CIOs I've met love the career path I've taken, and ask me what it takes to be there and how they should go about it," says Alvarez.
But he says that not all CIOs want to make that jump. For former Betfair CTO Devine, the attraction of being a CEO was to "get hold of the strategy more closely".
"Normally you're reporting into [the CEO], but there's nothing more exciting that doing that yourself, with no one else to blame but you. That for me was interesting, in terms of creating a vision and a plan with ultimate responsibility," he says.
"That's what attracted me personally, and a lot of CTOs that I've met are similar," he adds.
The "right" organisation to make the shift
If a company is a pure-play online retailer or gaming firm, or any other firm where data and digital is at the core of what they do, such as Experian, then they are more likely to approach CIOs to become CEO.
Ogden Bernstein, for example, has just hired a CIO to become chief executive of non-departmental public body Jisc. Mumby puts this down primarily to the fact that Jisc is a technology business.
There is no "one size fits all" solution - those companies who are doing financial restructuring will more likely recruit a CFO to be a CEO, while those aiming to expand their businesses and grow, could hire CIOs.
But according to Turner, Norman Broadbent has never had a mandate where it has specifically been asked for a CIO candidate for a CEO role.
"But we've seen it more on the boards, with chairs asking for a new non-executive director that specifically has a CIO background in a FTSE250 role. Many of these CIOs can carry on with existing roles as CIOs in other companies," he says.
Turner believes that this means that over time, the CIO is more visible to the board, and therefore you will see more of them making the leap to being a CEO. However, he says that this is more likely to happen in an organisation that they are already in, rather than being the CEO of another business altogether.
Devine says that while it isn't an easy jump, he doesn't think it is any harder than it is for those individuals who come from finance or marketing roles.
And as BT's Alvarez concludes, CIOs shouldn't be shy of becoming a CEO, and equally companies shouldn't disregard CIOs for CEO positions.