The Modern CIO Dilemma: Trust, Transformation and Exponential Technology

0:07 - Hey, I'm Andrea Deal, part of Protiviti's CIO Buyer team, and I'm here with Dan Stummer

0:12 - You want to introduce yourself for sure.

0:14 - Thanks, Andrea.

0:15- My name is Dan Stummer.

0:16 - I'm Managing Director, also part of the CIO buyer team.

0:19 - Dan, can you talk us through what exactly is the modern CIO dilemma?

0:24 - Yeah, it's a it's a great question because one of the things that we've talked a lot about is like how did we get to this moment and what are the challenges that people face?

0:31 - So I think the easiest to think about, easiest thing to think about in the context of the CIO dilemma is this idea of transformation, modernization and things along those lines.

0:40 - But at the heart of the way that we think about that is really around a red pill, blue pill type of moment.

0:47 - Talk me through what that actually means.

0:49 - Yeah, it's a great question.

0:50 - So I think that the idea is, is that if you take the blue pill, you're stuck on the same exact journey that you're always been stuck on, which is that idea of we're going to go through a modernization effort, we're going to do large scale Rd.

1:01 - maps, we're going to go through and really transform the organization, The red pill.

1:05- On the opposite side of that is the realization that 75% of the blue pills never actually come to fruition.

1:12 - So one of the things that we talk about is how can you be much more successful within that context?

1:16 - And I think the first thing that we recognize is that it's just actually hard for the CIOs.

1:20- And why is it hard?

1:22 - It's hard because we can't have that honest conversation.

1:25 - We can't actually talk about the complexities of technology.

1:28 - But when you really think about it, it's not necessarily a technology problem, it's actually a culture problem, it's a human problem.

1:34 - And really at the core elements of what we end up getting into, this is the realisation that those that are successful have high trust environments.

1:43 - You talk about exponentials, exponential technology.

1:47 - Can you help me understand what is what does that mean?

1:50 - Yeah, I think that those are the words that get thrown around an awful lot today, right.

1:54 -So, you know, 10 years ago, 15 years ago it was cloud.

1:56 - And then you get into this conversation about now it's AI and a couple of years it'll be quantum or even a couple of months the way things move.

2:03 - So that idea of how things move on a on a very different curve.

2:07 - So when you think about platforms and you think about, you know, network effects and, and you know, exponentials is another word that we love to be able to use, but I think we use them without really fully understanding exactly what they mean in that context.

2:21 - So I think if you fundamentally think about a change curve, most people are really quite comfortable with this idea of linear progression.

2:30 - I'm able to see it, I can know exactly how far away we are.

2:33 - And it's quite easy.

2:34 - When you start thinking about technology, what you really recognize is that it's not actually on a linear change curve, it's actually on an exponential curve.

2:42 - So it gets into that idea of like, how do you handle the, the, the concept that technology changes so rapidly and the expectations kind of collide with those rapid changes and you get into a situation where you just can't catch that curve any further.

2:58 - But I feel like I can conceptualize that.

3:00 - I can see a linear growth curve.

3:01 - I can understand an exponential growth curve.

3:05 - Why are you arguing?

3:06 -There's a disconnect.

3:08 - I think that you think you can, and I think that that's pretty normal for what people believe.

3:13 - But when we go through it and we like to take people through, you know, a pretty simple explanation, and we'll say, OK, listen, let's just test whether you really fully understand an exponential curve.

3:22 - And the first thing we'll do is we'll say let's just start off with something simple.

3:25 - Let's take 30, you know, linear steps, 123456 all the way up to 30.

3:31 - So if I were to ask you to do that, take 30 linear steps, where would you be?

3:34 - I'm probably across the room for sure, right?

3:37 - It's easy.

3:37 - It's easy to conceptualize.

3:39 - You know, our brains have gone through that entire piece.

3:41 - But when I ask you to think about something very different, which is that idea of having 30 exponential steps.

3:46 - So in this particular case, I'm going to ask you to take 12481632 and I'm your 30th exponential step.

3:54 - Where do you think you're going to be?

3:56 - Well, we're in Vegas now.

3:57 - I'm from Chicago.

3:59 - Maybe I'm closer, maybe I'm in Chicago.

4:03 - It's a good guess, but it's wrong, right?

4:06 - So nice try, but it's not atypical because partly what ends up happening is that actually is probably a pretty good guess.

4:12 - But the answer to that 30 exponential steps is actually 26 times around the Earth, right?

4:17 - So actually not close.

4:19 - Actually not close, just so we're clear, not close.

4:21 - Got it.

4:21 - But I think one of the things that often happens is people will say things like exponential curves and they'll talk about the idea of understanding adoption rates and platforms and network effects.

4:32 - And what you end up finding is that they really just cannot conceptualize that because we weren't really wired at an evolutionary level to understand just exactly what that curve looks like.

4:43 - But if you're ACIO that's sitting in an organization in which you have all of this amazing technology that's coming forward, you get lost in that dialogue of being honest about where we actually are.

4:53 - And so somebody be like, well, how are we going to take advantage of that?

4:55 - And if you're not careful, you get caught in this idea of 123456 looks eerily similar to 1248.

5:04 - And then all of a sudden, it's not.

5:06 - And you get lost and you recognize that you're no longer on the right curve.

5:09 - OK, so I understand exponential technologies truly, that we can't conceptualize this as humans.

5:16 - What can CIOs do then?

5:18 - Today, tomorrow, to make any sort of action.

5:21 - Yeah, I, I think that's the right question.

5:23 - And I think that you you have to build a little bit of pragmatism into that conversation because otherwise it gets a bit too esoteric.

5:30 - And I think the first thing that I would say is you have to admit that it's hard.

5:34 - And you have to be honest within your organization and you have to create a safe space in which you can all have that conversation and just fully acknowledging that one, this is really, really hard.

5:43 - And we probably don't really understand it.

5:45 - So I think that's the first thing.

5:47 - I think the second thing that we can do is then recognize that we have to create an environment of trust and in that moment and thinking about what are those enablers for a culture of trust?

6:00 - Because to be very candid with you, trust is the currency for growth.

6:04 - And you really have to get into that moment of understanding, how do we foster, how do we create safe spaces so that we can have honest dialogues around those.

6:12 - And I think once you've done, one, we know it's hard.

6:14 - Two, we know that we've got to create a space in which we can try and experiment and do all of those elements in a safe space.

6:20 - I think the third thing that becomes really about that pragmatic way of going is just really fully under, you know, understanding that you probably don't need another large transformation or full on modernization effort.

6:31 - What you should really think about is how do I start small?

6:35 - And, you know, I like to think about the idea that the concept is like, slow is smooth and smooth is fast.

6:42 - All right, I'm following.

6:43 - I understand as humans, we struggle to conceptualize linear growth versus exponential growth.

6:48 - What does that mean for a CIO today?

6:50 - What can they actually do to make progress?

6:52 - Yeah, I I think that's a great question because otherwise you get into this very esoteric moment, and that's really not the purpose of it, right.

6:58 - So I think the first thing that you have to do is 1 just get together and acknowledge that it's just fundamentally hard, right?

7:06 - So the technology is difficult to conceptualize, but the environment's tough, right?

7:11 - So it's it's just a really, really challenging moment.

7:14 - So I think the first thing is give yourself a little bit of grace, give your team a little bit of grace, give your partners a little bit of grace and, and just acknowledge that it's hard.

7:21 - The second thing that I think you should go through is really just kind of understanding that once you know it's hard, you have to create and foster an environment that allows for trust.

7:31 - So you're going to want to figure out a way in which you are OK with failure, you're OK with experimentation, you're OK with innovation and things along those lines.

7:37 - Because the truth of the matter is the where we Live Today is trust is the new currency for growth, which then brings you to the third thing, which is like, OK, that's great.

7:48 - So how do I operationalize that?

7:51 - And I will tell you that you probably don't need a new trans large scale transformation.

7:54 - You probably don't need a new road map.

7:56 - You don't need things along those lines.

7:57 - Are you sure you're a consultant?

7:58 - I'm aware, right?

8:01 -  But I think really what you probably need to do is to think about how you internalize innovation within your organization and how you go about thinking about, well, what does my partners look like?

8:09 - How do we go about and think about bringing more people into this fold?

8:12 - And honestly, it gets about that concept of slow is smooth and smooth is fast.

8:18 - So you want to think about these ideas of compounding wins.

8:21 - And so it's something that's going to be somewhat small, be very, very tactical in that we have this particular use case.

8:27 - We're going to be able to put this value that's out, and you're going to be able to stack that win and you stack enough of them and you've built enough trust and credibility within that.

8:34 - And I think that really gets to that idea that small is really, really large when you think about it from a compounding perspective.

8:41 - That's what I would recommend on Monday morning.

8:43 - I see that it's having these small projects is actually building a bigger amount of trust that enables you to actually have the transformation that you're always aiming to have.

8:53 - Dan, we know that one of the largest challenges for CIOs in financial services is that roughly 70% of their budgets is captured in run activities.

9:05 - How do you suggest that they take a look at that problem and and help solve for it?

9:10 - Yeah, I think this is a really good, good point because one of the things that often gets overlooked is just that that that change versus run in balance into, you know, you think about your large financial institutions and they too have this similar challenge, but they just have so many more dollars that they can throw at it.

9:28 - So for kind of the, you know, the the more middle sized organizations that that it becomes much more acute.

9:36 - And I think one of the things that we look at is the imortance of understanding your alliance and ecosystem artners, because what you have to recognize is that there's no way that you're going to be able to compete and the same amount of innovation spend, nor would you actually need to.

9:51 - If you're able to, to look at a partner, whether it's sales force for kind of the front end and that the the change that you're looking to be able to make in that particular area of your business.

10:00 - Or if it's more of a back end that you're thinking about with the service now platform, really leaning in and deciding like this is going to be our, our, you know, partner of choice, our platform of choice.

10:09 - We're going to take it as is into our environment and what you're really getting is all of the dollars, the research dollars that they've spent and you really recognize that they are on that competitive space.

10:19 - So what you're getting is all the benefits from it.

10:21 - But one of the things we would advocate for is really thinking about who those partners are.

10:26 - There doesn't need to be a ton of them.

10:27 - Choose one or two that you're really, really going to, you know, embed within your organization and then move forward, but really go all in with those partners.

10:36 - And I think that's one of the things that we try to do here at Protiviti is that idea of really recognizing the importance of going going to going to market with a partner of choice.

10:47 - And you know, whether that's for us with their sales force or whether that's going to be, you know, a ServiceNow, particularly within financial services, those are the two that we see most often is where people want to be able to spend a good deal of time.

10:58 - And we recognize that the importance is actually putting something in that ecosystem, building an asset on their platform that is unique and bespoke.

11:06 - And we're committed to doing that as well.

11:08 - So just like we're advocating for our clients, we do the same thing.

11:12 - We think it's important that we are a part of that ecosystem and we're building assets on those platforms as well.

11:17 - That's great to understand.

11:18 - It's it's helping solve a dilemma that's not going away, but it's rather finding a partner to help you offset those costs and who's focused on innovation in ways that maybe you don't have the dollars to be as committed to the journey.

11:31 - Yeah, I, I think that's, that's absolutely right.

11:33 - And I think one of the things that we look at when we look at our ecosystem strategy and our partnership strategy is there are some that do this really, really well.

11:41 - And it gets back to one of our earlier conversations, which is what does it mean to be a platform?

11:46 - And when you look at, you know, sales force as a platform or you look at service now as a platform and work day and things along those lines, you really recognize that it creates this network effect because all of these other players in these small fintech will actually snap in.

12:01 - So the benefit of being really embedded with one of those primary partners that we talked about is that you naturally will get all of the integration capabilities of all of the other fintechs you're looking to be able to partner with as well.

12:13 - Dan, it feels like everyone's an AI company now.

12:16 - Yeah.

12:17 - How do you talk through, you know, where, what, how does technology have a play in this?

12:23 - What how do companies differentiate in this environment?

12:27 - I I think that's probably a, a really good question in Segway, especially for those firms, those, you know, those banks that don't have billions and billions of dollars to be able to spend on this.

12:37 - So we can give the cliche answer of like what data is really important and by the way, it's super important.

12:42 - But I think one of the things that we need to be mindful about is, is that for smaller and mid size firms and banks in particular, one of the most important strategies that they can commit to is kind of understanding what their key partnerships are going to look like.

12:55 - So you really want to be able to take advantage of that idea of these large ecosystem partners.

13:01 - These platforms are spending billions and billions of dollars on AI.

13:06 - So you are going to be able to benefit from all of those innovation dollars, all of that research, the way in which they've been able to integrate into core platforms by just making strategic choices with key, key ecosystem partners.

13:19 - And then the benefit thereof, if you're one of those firms that is doesn't have hundreds of billions of dollars to be able to spend or isn't actually just an AI firm to begin with, is that you get all of the other firms that are snapping into those platforms.

13:32 - So if you think about Salesforce, if you think about, you know, Work Day and Oracle and all of those other elements that are in there, one of the key things that they bring to our clients is the idea that they've already built an ecosystem.

13:45 - So the integration, while not seamless, is so much easier for people.

13:49 - And you then get these knock on effects and all these other benefits as a result of choosing very wisely your strategic partners.

13:56 - It's helpful.

13:57 - So how does Protiviti think about our ecosystem partnership and how we service our clients together?

14:04 - It's a great question because you can get lost in, you know, 1000 different providers and depending on what you're actually looking for, there's a lot of niche players that may be very, very relevant.

14:14 - But the way that we think about our ecosystem strategy is there's a core 6 that we think about, right?

14:19 - And within those core, the primary thing for us is just understanding the context in which they played in a particular industry.

14:27 - And so I think that where we see it from a financial services is whether that's a service now and we think about the back office, you know, focus and being able to think about operationalizing that and resiliency plays that exist within it.

14:39 - Or if we flip that and we think that it's something like Salesforce.

14:42 - And then you get into this conversation about front end in growth and CRMS.

14:45 - But the irony is those two firms, and we use those specific examples here, are actually competing for the same space.

14:52 - And so there's a lot of great integrate, you know, into integrations that they provide and synergies thereof.

14:59 - That's helpful.

14:59 - Yeah, I I can understand how organizations can leverage ecosystem partners to to truly enable their future growth when budgets are constrained and priorities are constantly shifting.

15:12 - Yeah, especially, you know, the, I think the latest statistics show anywhere between 70 and 80% of most firms IT budgets are stuck in what we refer to as run, right.

15:22 - So run mode, keep the lights on and things along those lines.

15:24 - So then the question is, how are you going to get strategic growth if you've only got $0.20, thirty cents on the dollar to be able to run your change agenda?

15:32 - Well, the, the real answer is that you've got to get leverage from somebody else.

15:35 - You've actually have to borrow.

15:37 - And the benefit of choosing your partners wisely and strategically and really, really committing to a few of those partners is that you get all of the knock on effects from all of the research and all the, the, you know, billions of dollars that they go through from a research and prioritization perspective.

15:51- You just have to be able to commit.

15:52 - You have to be able to stay up with that.

15:54 - And then you recognize the benefits of all of the ecosystems that they that they bring.

15:58 - It's helpful.

15:58 - Yeah.

15:59 - Thank you for talking us through that.

16:00 - Thank you for helping us understand how we can make this actionable today.

16:05 - Appreciate it.

16:05 - Thank you.

16:06 - Thank you.