James Franklin: Hi, Gary. It's great to have this opportunity to speak with you a little bit about what's going on in the business climate today, and the role IT plays, and what is happening with the CIO. Maybe you can start with talking about the business climate. What are companies faced with today, what are those challenges, and what do we have to think about as we go forward?

Gary Hamel: I think there are at least three kind of fundamental "make or break" challenges for organizations today. First, we all know we live in this world of accelerating change that renders old business models obsolete a lot faster than it used to, so I think every company around the world is really struggling to answer the question, "Can we be as nimble as change itself?" Can we change at the rate of change? Of course, you see a lot of organizations today that are falling behind the change curve, in fact you see entire industries like the old music industry or publishing, and I would argue healthcare and education, that are really struggling. So for me the most important question for any company today is that question, "Are we outrunning change?" And again the answer from many organizations is they are not. So we need to build organizations that are fundamentally more adaptable. I would say that's kind of challenge number one, organizations that are able to change and reorient without having to go through some kind of valley of the shadow of death experience before that that reality dawns on them.

Secondly, if you want to have a very adaptable company, we need companies that are enormously innovative. We live in a world where the competitive intensity is getting just so much tougher that the old barriers that used to protect the incumbents, the regulatory barriers, the technology barriers, those things are crumbling down. You see a couple of kids write some code in Estonia, which becomes Skype and threatens the infrastructure of the old telecom industry. So this is happening all across every industry and the only anecdote to that kind of margin-crushing competition is going to be more innovation. But there again, there are very few companies I would argue today that have really made innovation the work of every single employee, that have really trained thousands of employees to be business innovators, or that have made it easy for employees to get acces to a bit of experimental capital to try a new idea. So that's a big challenge for most organizations, where innovation is still kind of a project, or a department, or something that happens once in a while.

Thirdly, you can't have an innovative company unless you have a company where people are truly inspired to come to work everyday and they are willing to give you the gifts of their passion and their creativity and their initiative. When we look at the data, we know that in most organizations it's a small minority of employees who are truly engaged in their work, who are there emotionally as well as physically. Maybe that didn't matter back in the industrial economy or even in the knowledge economy, but in the creative economy where wealth creation is dependent on giving those gifts of imagination and creativity, we've got to find places where people are really excited to work.

So for me Jim, those are three big challenges: a company that can change as fast as change itself, a company where innovation is everyone's job, and an organization that truly merits and deserves the best contributions that everyone can give everyday.

James Franklin: That's interesting Gary because what you just described is really paramount to what CIO's face. If you think of where CIOs started years ago, what was their mission? Their mission in many respects was to know the technology, bring the technology, and technology in it of itself was viewed as the innovation. Well that's not true today anymore, and the role of the CIO is changing. It's not just about the innovation, it's how are we taking those enablers, driving business innovation, not just technology innovation, and then having all the things in the CIO organization meet that. So what is your view, in terms of the CIO role itself, and the challenges IT and the CIO are facing and the context of what you just described as the business challenges?

Gary Hamel: It's a good question and since I am not a CIO I will just give you my perspective, and you can tell me whether it makes any sense or not. Where you started there has definitely been my experience, that most CIO's over the last few years are worried primarily about strengthening the "run the business" systems, logistics, supply chain, customer support, the internal data the people need to run the company, lowering transaction costs, improving reliability, and so on. And that's going to be really important. But I would add two other things to that kind of "run the business" charter. What we see around the world is that technology has also had a huge impact on business models. In fact, most of the companies with interesting, exciting new business models are companies that are leveraging technology to do that in some way or another. You see it in education, you see it in obviously the social media world, you see it in entertainment, and you see it in any industry that has a high knowledge component or information component, so CIOs also need to be business model innovators today. They need to be the ones that are looking from the customer back, asking how do we use what we know about these new technologies to fundamentally reinvent the customer experience?

Then beyond that, if you take these kind of organizational challenges we face of becoming more adaptable, building a more engaging place to work, being more innovative, the reality is, it's our management processes that get in the way of doing that. If you think about it, over the last hundred years the most important technology that human beings invented was the technology of management itself. How do we organize, allocate, plan, hire, motivate? All that innovation in management allowed us to build companies like Dell that are enormously efficient, can do things at global scale, can do them reliably, but that management technology was all built around focus, efficiency, control, alignment, and now we need organizations that are incredibly nimble and innovative and inspiring. So I think we are going to have to think as a CIO community as how do we use technology to reinvent not only the business processes, supply chain, and so on, not only the business model, but now also the management model. Because I think that technology is going to have a huge role to play in making organizations more adaptable, more innovative, more engaging for folks to work in. You see how technologies has already changed our lives, it has to fundamentally change our work lives as well, and for most employees that's not true yet.