Crown Agents Bank is what you might call old money. The U.K.-based financial services firm traces its roots to the 1740s, when its representatives supervised transfers from the British treasury to overseas colonies. So Crown Agents wasn’t anyone’s idea of an innovation hotbed when a private equity fund acquired it in 2016.
The new leadership group was ready to provide a capital infusion. Albert Maasland, group CEO, knew this was his company’s chance to transform itself. The biggest obstacle: “The organization had limited experience implementing new systems,” he says.
So he threw himself at it. “The first stage was overseen largely by me,” Maasland says. By seizing the leadership role instead of delegating it to an inexperienced organization, he was able to “really force it through.”
Many CEOs are obsessed with innovation—and they have to be. They’re under constant pressure to keep their organizations growing while fending off an ever-growing roster of competitors. It’s no surprise, then, that they rank using technology to create new business models and building an innovation culture as top priorities, and why 82% say they’ve started a large-scale digital transformation initiative.
Those findings—from the Conference Board and Gartner, but representative of many more—also help explain why CEOs are the toughest critics of innovation efforts inside their companies.
Indeed, few CEOs say their companies are in the advanced stages of progress toward various innovation goals, according to a new survey by ESI ThoughtLab and ServiceNow. Consider:
- Just 24% say they are in the advanced stages of innovation around products and services.
- Only 12% of CEOs say their companies are well on their way toward becoming more customer-centric.
- A mere 2% say they’ve succeeded in re-inventing business processes.
CEOs are also strict judges of the contributions made by the chief information officer, the executive often tasked to lead new technology initiatives.
- 29% of CIOs said they’ve made a major contribution to data-driven innovation at their companies. Just 10% of CEOs agreed.
- 46% of CIOs credited themselves for major improvements in risk management. Only 16% of CEOs felt the same way.
- 47% of CIOs said they played a major role in building innovation-friendly cultures. Only 26% of CEOs concurred.
Interviews with CEOs, other executives, and innovation experts show the survey results aren’t so much an indictment of CIOs as they are an indicator of how CEOs view their role.
“The real chief innovation officer is the CEO,” says Othman Laraki, CEO at Color, a health technology company. “When I see someone with the title ‘head of innovation,’ it signals to the rest of the organization that it’s not their job to be innovative or embrace change,” says Laraki.
Indeed, the chief information officer—the person nominally in charge of technology—is the executive in charge of innovation at only 17% of companies in the ESI/ServiceNow survey. Much more often (69% of the time), innovation leadership is a shared responsibility.
Culture as the key to innovation
For Laraki, successful innovation emerges only when people at all levels of the organization think of it as their job. Positioning the CIO as an innovation guru undercuts that message.
His belief was put to the test several years ago, when Laraki had a hunch that his engineers might find ways to reduce the cost of one of Color’s key offerings, a genetic test for cancer and cardiovascular disease that required clinical-grade quality and accuracy.
Laraki asked the teams to tackle the problem in small, methodical steps. One of the lab teams totaled up the cost of thousands of micro-procedures involved in genetic risk-screening on a massive spreadsheet, then worked on knocking off a few pennies from each one.
By recalibrating hundreds of tiny, liquid-handling robots, engineers found they could decrease the amount of liquid reagent that was wasted in the process, saving 5 cents per test. The group effort ultimately yielded a huge win—a rigorous genetic test available for a fraction of the price of similar tests offered by large diagnostic labs.
“Culture is the single most important factor in fostering innovation,” Laraki says. “People tend to think about innovation with a big ‘I.’ Sometimes what differentiates great products are small incremental ideas that would be hard to do in a high-friction environment, but ultimately add up to a lot. We try to create an environment that allows nascent ideas to find a foothold.”
CIO as chess master
Since pushing through those first transformation projects, Crown Agents Bank has grown four-fold. Led by a new CIO, it has automated many of its old processes and even acquired a financial tech company in order to use its platform.
Maasland no longer has to push for change alone. “Every single person on our executive committee is playing a role,” he says. That includes a CIO who, fittingly, holds the title of director of transformation.
For Maasland, this executive serves as a helpful counterbalance to his own ideas, a trusted partner who understands both the promise and the challenges of a particular technology, and who can guide the C-suite toward the right long-term choices.
“What I want in a CIO is someone who knows how to play chess, someone who can think through the consequences of the decisions we make and see several moves ahead,” says Maasland. Some of the tension between CEOs and CIOs, Maasland says, is healthy. And sometimes a CIO’s direct pushback is invaluable.
For example, Crown Agents thought it could increase revenue by upgrading part of the payments infrastructure in its core banking system. But the CIO pointed out that would make it harder to roll out a planned new product that had an even bigger potential return.
“There will be times when the CIO has to be strong and say, ‘No, this solution will feel good in the short term, but in 18 months’ time the cost and complexity will increase many times over,” Maasland says. “If you play chess, you’ll understand.”