Chief Digital Officer

But could the IT department’s very existence — and the wall that is too often erected between technologists and the rest of the business — actually be the reason many organizations are having difficulties embracing digital opportunities? <a href="http://cisr.mit.edu/blog/documents/2018/11/15/2018_1101_dontaligncoevolve_peppardfonstad.pdf/"></a>

For years, chief information officers have focused on aligning IT investments with the business’s strategic goals, but Peppard and Fonstad argue that’s the wrong approach. Instead, they maintain that organizations should be seeking to “co-evolve” the investment portfolio in technology with customers and the broader ecosystem.

The pair found that as firms are shifting their focus to the needs of customers, they are empowering a greater number of cross-functional teams throughout the organization with data and digital technologies to better understand and address customer needs.

In the process, they are integrating IT into the very fabric of the business as a whole. The result is that in some cases the responsibilities of IT are expanding, in other instances they are shrinking — and in some rare cases, IT departments are being eliminated altogether.

“It’s no longer about aligning IT with the business,” Peppard said. “That sort of sets you up to fail, because in many ways, it suggests that technology is subservient to business — that the IT unit is sort of an order-taker. It doesn’t recognize that today, in a digital world, technology provides tremendous opportunity to actually shape not just the strategic direction of an organization but meet operational ambitions too.”

Achieving alignment is built on the assumption that the business can specify requirements precisely, when reality is far more complex and uncertain, said Fonstad.

“The interdependencies are much richer,” he said. When technology is baked into the fabric of an organization and embedded in products, processes, work practices, and customer engagement, the focus is no longer on just the technology requirements of the business, they write.

Fonstad and Peppard recommend shedding the traditional, linear product-development process and adopting a more agile, iterative approach that allows firms to shift technological capabilities and adapt to changing customer needs more rapidly.

“That whole linear kind of process doesn’t work anymore,” Fonstad said. The new approach is “much, much more iterative, cross-functional, and co-evolutionary. It involves multiple functions within an organization, and external stakeholders — most importantly, the customers. If we take co-evolution seriously, it’s going to lead to significant changes in the way work is done, and that’s what we see a lot of organizations struggling with.”