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Why Every CIO/CTO is a Venture Capitalist

June 6th 2014

The report (Tech Trends 2014 Inspiring Disruption) covers an interesting range of disruptors and enablers.  It correctly identifies the fundamental difference in agility and speeds between traditional organisations and those in driven by Venture Capitalists in startup and strong growth phases.  The key differentiator is that traditionally projects are expected to succeed, whereas in startup mode, failure and shutdown is often experienced.  In other words, just as there is no manual for Venture Capitalists on which opportunities to back, there is no way any CIO can actually know which projects will really add value to the organisation.

Instead, CIOs need to think that they are investors managing a portfolio.  They need to look at each project and critically analyse how likely it is to succeed, how much of a real difference it would make to the organisation, how likely the right talent is going to be attracted to it (in startups, the savvy VC knows that execution rather than inspiration is what makes the difference) and so on.  CIO as VC will back multiple initiatives, just as the real VC will hedge his investment portfolio.  So you will get competing projects, perhaps with similar goals, each looking to get attention, attract the best resources and gain traction. 

Of course, some – many – projects will fail, and organisations need to get comfortable with this. There’s a whiff of Emperor’s clothes here.  Perhaps a third of IT projects fail to deliver and another third find that the organisation has moved on so much during the project that it’s value is diminished anyway – but these stats are rarely aired.  But the CIO as VC would embrace this – a third of investments are real winners, a third give the money back and only a third fail. 

It’s become a high stakes environment.

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