|
A Creative Stress Test
A 2006 Harvard Business School study finds that strong IT is essential to profitable business growth and productivity at midsized companies. The survey of more than 600 midsized global firms shows that those with strong IT capability grew revenue nearly 7% faster per year and enjoyed 23% higher revenue per employee than their peers with weak IT capability. The companies range from 100 to 500 employees. "Growth is a big strain on organizations," explains Marco Iansiti, the David Sarnoff Professor of Business Administration at HBS and one of the study's authors.
Most companies have a small number of people tending to customers and other critical tasks. When a company grows, people get stretched. And when growth outpaces what people can do, the scene is set for disaster. "Those organizations that are thoughtful about IT implementation and deploy it as they begin to grow can do much more to chase the business opportunities by releasing the talent and capabilities of the people in the organization," Iansiti says.
In other words, fast-growing companies require CIOs who can act quickly and creatively to free up technological and organizational clogs that stymie growth.
Patrick Melanson was the CIO at Prudential Steel Ltd., a Calgary-based subsidiary of Maverick Tube Corp., when he got a call in late 2002 from Maverick's CEO to do just that. Corporate information systems needed some law and order; the fast-growing steel pipe maker Maverick had decided to adopt the GE model for integrating its many acquisitions; thus subsidiaries would function as independent business units but comply with certain standards and procedures decreed by the head office. The CEO asked Melanson to move to Missouri and make the hybrid model work for 4,700 employees at the combined $1.8-billion entity.
"I was not even in the job yet, and the phone started ringing," recalls Melanson. Maverick had just acquired five pipe mills from a bankrupt competitor, and someone had botched the transition agreement with the IT department. "Email and Internet was going to get cut off at the [deal] closing for all these pipe mills. I was getting calls saying, 'Hey, they're going to get cut off; we gotta do something!'"
Restoring Internet access for the new acquisitions was only the tip of the iceberg. Melanson had to stabilize the company by creating a new IT infrastructure that could evolve. More important, he wanted to find a painless way to help executives understand IT's role. One day he awoke with a unique idea: Fashion IT operations like one of Maverick's plants, with an IT front office, IT plant maintenance group and IT plant engineers. "I came up with it in my sleep," he says.
Since 2003, Melanson has worked under three presidents and two CFOs, helped integrate half a dozen acquisitions, assumed sponsorship for a PeopleSoft implementation and -- oh, yes -- kept IT humming while Maverick logged a three-year annual growth rate in revenue of 52%. Now Melanson's IT plant idea will be further tested; the Luxembourg company Tenaris recently bought Maverick for $3.2 billion.
Finding out-of-the-box ways of doing things is the hallmark of successful CIOs at fast-growth companies. As Sowa says, "When you get to a small company that is growing like fire, you don't necessarily have all the policies and procedures and ways of doing business well defined, and you're having to invent them as you go along."
|
