In fact, in recent years a number of leading digital-native companies (generally founded after 1995) have hired their first-ever global CIOs. The decision to do so typically happens around the time their annual revenue falls in the $500 million to $1 billion range. At that point, the company has grown geographically, offers a complex mix of products and/or services, engages with a big number of vendor partners, and uses a growing suite of technologies.
Many of the CIOs who join these companies come from the ranks of the Fortune 500, where they have headed the primary technology function and are considered the unquestionable expert in their discipline. On the other hand, almost everyone is seemingly a tech expert at a digital-native company.
Yet CIOs remain undeterred.
“The change has been refreshing and exciting,” said Zoom CIO Harry Moseley, who left his role as KPMG CIO to join the video communications company in early 2018. “The entrepreneurial culture that our founder and CEO, Eric Yuan, has established is amazing. The culture is open and transparent, and we have a biweekly all-hands meeting with every member of the company around the world. Every question that gets asked is owned and answered by a member of the executive team.”
Another reason why “trading down” is attractive lies in the opportunity for CIOs to test their skills in terms of becoming more agile and building a technology infrastructure from the ground up.
From the reverse perspective, what do digital-native companies hope to gain by hiring these experienced CIOs? Experts have boiled it down into four main buckets.
In a startup’s earlier days, IT has typically been in the good hands of a VP of IT or director of engineering. These individuals have kept things together, and they have planned ahead of the company’s growth, but they have likely never run IT for a billion-dollar revenue company.
Bringing in someone who knows how to build an organization structure that reflects the needs of a business like this is paramount. So is having a leader who understands the governance and processes necessary to ensure that inefficiency is removed from the portfolio.
“[CIOs] actually have to understand more about business than [anyone else] so that we can insert the technology in clever, meaningful, sticky, secure, and scalable ways when it’s ready,” said Accenture CIO Andrew Wilson during a CIO panel discussion in March at Adobe Summit.
These CIOs also come with an existing set of contacts among the broader ecosystem, such as target customers or vendors for the digitally native company to lean on.
In addition to their strategic chops, CIOs also bring to digital-native companies their experience in building teams. As they settle in, they are apt to bring in some new hires to create a new office of the CIO and other new leaders.
“When additional headcount funding becomes available, [IT] usually pleas for help and places high priority on recruiting additional service desk technicians or developers that can shoulder some of the burden that they’re personally experiencing,” said Mark Settle, who became security provider Okta’s first CIO in 2016. “A seasoned CIO, however, is likely to have a very different perspective and place higher priority on hiring a solution architect, project manager, or business systems analyst that can extend the capabilities of the IT organization and deliver greater overall business value.”
For B2B digital-native companies, specifically, CIOs like the ones noted above often used the products and services that they are now selling. As such, the new CIO of the company can operate as “customer zero,” testing and using products, providing feedback, and providing suggestions on new bells and whistles for the company to incorporate.
“Figuring out how [IT, product, and engineering teams] work together to understand where the technology trends are and where we think the architecture can head is an important aspect for [IT],” noted Diana McKenzie, who was the first CIO at Workday after working at numerous Fortune 500 enterprises. “We are making sure that, as an IT organization, we are supporting the engineering organization so they can focus all of their time and energy on developing the future product.”
For those CIOs who were customers of the digital-native company prior to joining it, the early days of their tenure are important to document perceived strengths and weaknesses of the company. That represents invaluable feedback for the company, offered by someone who has a strong incentive for the company to continue to improve. This product orientation may be the first foray for these CIOs into revenue-enhancing activities on a larger scale, and it serves them and the company equally well.
As mentioned, customers of B2B digital native companies are often CIOs themselves. For this very reason, digital-native companies often assign some of their largest accounts to the new CIO, the thought being a peer CIO can offer a different perspective from any other executive in the digital native company. They can share their own impressions of the company from when they were customers themselves. They can go deep in the weeds, so to speak, on the technologies, how they fit into the broader portfolio of technology that the customer employs, and simply lend an ear on topics related to the digital native company. These tend to be productive and sticky conversations.
“My job puts me in an interesting position for a number of reasons,” Zoom’s Moseley noted. “CIOs enjoy talking to other CIOs, especially from tech companies. They understand technology, so we were able to talk tech. Also, the CIO is at the epicenter of companies. CIOs know what can be done and what cannot be done. The day of hiring a CIO to come in and future-proof your technology staff and your technology company is here.”
Ultimately, some aspects are simply universal, said Trevor Schulze, CIO of RingCentral, who has led IT for companies from the Fortune 100 to startups.
“I’ve learned that regardless of company size, it’s extremely important for any CIO to stay focused on three key pillars: revenue generation, customer satisfaction, and employee productivity,” he told CMO by Adobe. “In our roles as digital leaders, CIOs need to step up and boldly drive the inevitable digital business transformation in each of these areas or risk their company being disrupted by others. As technology innovations continue to evolve, now more than ever, business partners are looking to the CIO to provide guidance and insights on how to successfully adapt to the future of work.”