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As technology has become a vital component of businesses across industries, many organizations have added technology professionals to their executive teams. This allows technology leaders to go the extra mile and contribute to the broader strategy and decision-making of the business. This requires familiarity with fundamental business concepts to understand all the potential ramifications and effectively communicate your views to other leaders and executive members.
So what do CIOs, CTOs, and other technology executives need to know to become well-rounded members of the leadership team? This article outlines some of the concepts you need to master to be an effective IT leader.
Related: The Entrepreneur’s Simple Guide to Business Concepts
1. The key performance indicators (KPIs) of the business
As companies establish new models based on digital technology, IT departments must monitor two categories of digital business KPIs.
The first set assesses the current state of digitization of the business model, including sales, marketing operations, supply chain, goods and services, and customer service. The second set of KPIs assesses the development and potential of new net income streams developed by exploring new digital business models and clearly distinguishes them from non-digital sources.
It is one thing to develop key performance indicators and quite another to discuss them. CIOs need to be able to articulate to their C-suite peers and boards what these digital KPIs measure and why they matter to the organization.
2. Cash flow
This is the cash flow in and out of a corporation. Cash inflows can come from sales, stock sales, financing, and other sources. The influence of cash flow is substantial, immediate, and ruthless if mismanaged. The key is to understand how to monitor, safeguard, manage and invest funds. IT leaders and CIOs need to understand cash flow, as money is king in any business. If CIOs understand the importance of cash flow, their IT strategies will focus on cash flow.
To manage cash flow, all IT-related contracts need to be renegotiated using a win-win strategy. CIOs should initiate an assessment of how they can manage IT spending without compromising IT service quality and business impacts, and discuss with business leaders how spending can be controlled, particularly where IT can help them.
3. The corporate culture of the company
The company’s DNA consists of its values, beliefs, and how its employees think and act. This is sometimes difficult to articulate, sometimes deliberate, and always significant on multiple levels. CIOs need to understand the corporate culture of any company, as all IT-related projects and modifications depend on the corporate culture.
Related: Company Culture Is Everything
4. Emotional intelligence
Emotional intelligence is the ability to work and interact with others while managing one’s own emotions. Typically used to describe a person’s interactions with a team, prospects, or customers. People are human beings and must be treated with respect in order to establish high performance teams.
CIOs and IT leaders need to understand this truth as they interact with business and IT staff. They should always have an emotional understanding of the problems people face and how IT can help solve them.
What processes and hardware require optimization? Consequently, if IT leaders/CIOs can manage people with emotional intelligence, they will gain the trust and respect of the business, and IT will become a trusted business partner.
5. Individual incentives
To successfully communicate with your leadership team, you need to capture the incentives. Each team has its incentives, including financial and social capital rewards. To be a great leader, you must put yourself in the shoes of each employee and understand their motivations. Customers, prospects, and board members are the most important stakeholders for technology leaders. Consequently, they must prioritize the incentives that lead to these results.
6. Involve employees
Creating a strong relationship between the organization and employees is often an HR goal. A highly engaged employee can be more productive and committed to the vision and goals of the organization.
IT leaders and CIOs must also recognize the need for cross-functional teamwork to deliver IT services more efficiently. They should always connect with HR teams to ensure they can run IT services efficiently, especially when situations like Covid-19 require employees to frequently work from home. Employee engagement will certainly contribute to the effectiveness of IT teams.
Related: How to Measure and Monitor Employee Engagement
7. Build an IT governance model that supports the business
Job number one keeps IT staff productive, empowered, and engaged. Lack of preparation will have repercussions throughout the company. CIOs need to form an IT Governance Committee urgently. Governance models are useful for providing oversight during typical business operations. If you have a problem with creating a proper IT governance model, you may want to consider consulting an experienced and reputable software development company near you that has operations in the US and other nearby countries.
You must support your staff, ensure their safety and develop a contingency plan for important responsibilities. Once the initial stage of communication and crisis management has passed, you need to establish defined roles and responsibilities within IT to facilitate the organization’s ability to respond quickly.
For technology leaders and executives to be effective in their professions, they must understand fundamental business ideas. Always strive to determine what business principles they can understand and how to collaborate effectively with company leaders. If key leaders understand the business, they can successfully help the business by understanding business challenges and concerns in line with the corporate vision and purpose.
IT leaders will be able to create a lasting IT organizational model that aligns with business plans if they have a solid understanding of business ideas, especially in this age of digital transformation.