Shaping the Future of CIOs Through a Business-Centric Approach with David Costar

Tim Crawford: 0:05

Hello and welcome to the CIO In The Know Podcast, where I take a provocative but pragmatic look at the intersection between business and technology. I'm your host, Tim Crawford, a CIO and strategic advisor at AVOA. This week I'm joined by David Costar, who is the Chief Information Officer at Wolfspeed. Aside from a non-IT background, david provides a thought-provoking perspective of the CIO role and how businesses need to rethink how they view IT and the role itself Now serving as CIO. He outlines specific skills needed for the CIO role and how that impacts the future playbook. David digs into what it really means to understand your business and how curiosity fits in. Lastly, we cover David's assessment on digital transformation, large system changes like ERP and how AI will shift paradigms. Moving forward, david, welcome to the program, thanks.

David Costar: 1:06

Tim, good to be here.

Tim Crawford: 1:07

Hey, David Costar, CIO of Wolfspeed. I think one of the things that I wanted to talk to you about today and I really appreciate your time and take time out of your day to join me on the podcast but I wanted to get your perspective on a few things From a background and maybe we can start here in the conversation. But as a background. You don't come from a traditional IT upbringing. If you will, you're not a traditional person that started an IT earlier in your career and you just continued up through the rank and file and all of a sudden, you became CIO. Let's start there and set the stage for folks that might be listening in. Then I want to delve into your perspective on a few things.

David Costar: 1:49

Sure you bet, tim, you're right. I am about as atypical of a pedigree that you'll see in a CIO, but I actually have to. After having been in this post for over three years, I've come to realize it's been one of my secret weapons, primarily because for my full career I was a consumer of IT services. I was a partner with IT. I was heavily involved in building and operating and running corporate service functions and organizational models and executing strategy that were really driving a lot of change in the organizations that I was a part of. It was always a huge part of that.

David Costar: 2:28

Over the course of 25 years, while I was not an IT, I always like to say I was heavily involved in enabling technology. I just happened to be more focused on HR and a lot of the corporate shared service functions and operating models, of which technology was a huge component of it, really assured me. Well, what it's enabled me to do is come into an IT organization that really was needing pretty dramatic change to deliver for the company I brought a non-system engineer perspective. I'm probably a good CIO for many because I'm not going to question their coding ability. What I am going to do is make sure that their business acumen is strong and they understand how the company comes up with product ideas, manufactures those products, sells them, makes money and gets returned. I think that's what's as critical, if not more critical, than understanding the bits and bytes of the technology that supports it.

Tim Crawford: 3:28

That's really fascinating to me, because quite often we talk about how CIOs and not even CIOs, but CIO minus one, direct reports of CIOs how they can get out into the customer space, understand what customers are going through. Try and walk a mile in their shoes. That makes you a better leader, that makes you a better CIO, makes you a better player in the overall spectrum. What I find interesting about this is you started there. You walked several miles in those shoes before you came to the other side of the table, if you will. Now you're bringing that expertise to the role of the CIO, which I find fascinating.

Tim Crawford: 4:14

I guess the other piece and maybe this will transition into one of the questions I have for you, which is how do you think that impacts or how do you think that can really affect CIOs Is there. Maybe don't have that expertise of the other side of the table, but what are you seeing that really needs to bridge the gap between the CIO of today and where CIOs might be? What are some of those gaps that you see and how do you see them getting filled?

David Costar: 4:47

It's a really good question.

David Costar: 4:48

I'll try to articulate two or three different responses to it.

David Costar: 4:54

First of all, what I have found in the interactions I've had with other CIOs that I've been fortunate enough to enjoy post COVID where actually we've been able to be in person is to reach the CIO level.

David Costar: 5:07

You have to be intelligent, you have to have IQ, eq, a lot of traits that are necessary to be able to navigate and that level of an organization and peer group. So I'd be cautious to say I don't necessarily view them as gaps, as maybe some blind spots or just some deficiencies, just like I have deficiencies. But some of the areas that I find to be differentiating in the circles that I interact with is, first and foremost, true business knowledge and not this is the kind of company we are, these are the kind of products that we make, this is the kind of product development lifecycle that we had to be able to support. I mean that's inherent, I think, in a CIO who comes up through the IT ranks. I would say a cut deeper is where I start to see those differentiating factors between what I think I bring in a CIO versus what I see my peers.

Tim Crawford: 6:06

What are some of those characteristics of that cut deeper?

David Costar: 6:10

So one is having a macro perspective on the economical value that IT can deliver to an organization, and what I mean by that is looking at if I find a way that we can drive efficiency within an organization. What is going to be the outcome of that way? I have found in terms of shortening cycle time, in terms of reducing costs and in terms of maybe even changing how we order or ship product to reduce our overhead costs, and not through a technology-first perspective. I think that's probably and maybe, tim, this is where you're trying to get me to go. What being a business-first CIO has helped me become is I don't take a tool-first approach to a problem. So when I'm speaking to board members or when I'm speaking to our CEO or CFO or product leaders or even customer CIOs and customer contacts I love getting out in the field and understanding what they need from us.

David Costar: 7:22

I don't immediately start asking questions to see if the problem we're trying to solve is going to fit within the suite of products we have. I try to make sure I first focus on the people, the process and the profit side of it, and then go back with my team and try to translate the business context into the implication of our system architecture and let them figure out and advise me on what the technical path options might be for that. The other one, tim, I'd say is strong financial depth and not just understanding the difference between CAPEX and OPEX, but really understanding the importance of deriving value out of the investment the organization gives it and not approaching it in a cost-center structured mindset. That's a difference I see with some CIOs. It's also a different I see with, frankly, some CEOs. How is IT viewed? I try to be very vocal of IT as a strategic organization that should be driving economic value, should not be treated as costing overhead expense.

Tim Crawford: 8:34

Yeah, no, I love that. There were a couple things that I just really resonated with. One is I've often said this I think I've even said this on the podcast in past episodes but in talking with other CIOs, you have to know more than just how the company makes money and spends money, but you have to understand how the wheels work more than just what a layperson outside understands. The inner workings of how that business operates is really, really key. Then your point about financial management. I talk about the big three. How many CIOs can read an income statement, a balance sheet? Those types of conversations are really important.

Tim Crawford: 9:14

But one of the things that really resonated with me out of what you were saying is you're focused on business value. You're focused on business value and not caught up around the axle, around well, technology, this, technology, that. But the other thing that comes out of that from a leadership standpoint is you're not the one that's solutioning it. You're relying on your team to figure out the technology piece. I think the piece for those folks that are listening to this podcast are think about that. Compared with where you, if you're an IT leader, where you are today, are you doing the solutioning? Where is your team in this equation, or are you that intersection of business and technology?

David Costar: 10:02

Yeah, that probably is something I'm very fortunate of, because there have been a couple of times where I've been asked hey, this isn't working. That question could be ranging from a port on the manufacturing floor to a laptop in upstairs office. My laptop doesn't work.

Tim Crawford: 10:20

The projector is broken.

David Costar: 10:22

I have the benefit of saying I don't know, but I can get someone from my team who is really good at that to figure it out. What I think is most important within a business-oriented CIO on top of what we talked about is curiosity. Where I've had the most fun in this job is when I've gotten to be part of a team that was installing a data center in our new FAB in upstate New York. That was fun. I love nothing more than getting out in the field, whether it be at our other locations, at our back end packages, at our customers and walking the floor to see how are we actually supporting this business and how do they operate. That demands us to understand how to support them. There's nothing more fun and more educating than getting on that bunny suit, walking through the clean room and talking to an operator who's removing a cartridge out of a tool and taking it to another tool. The more I can understand how that works, the better I can help our technology experts grasp the business context of how we work with the business.

Tim Crawford: 11:35

You know it's funny. You mentioned the bunny suit because we've both worked in semiconductors and I completely agree. When you don the bunny suit. I think the first time you don the bunny suit you're like, oh my gosh, people have to do this every day, and sometimes multiple times a day Because, let's face it, you come out of the bunny suit when you have to go to the bathroom. You come out of the bunny suit when you have to go have lunch, right, and so it's. It is a daunting process, especially depending on the level of the clean room that you're working within. But, to your point, you're in the field. You're in the field to play. It's not just you're looking at reports, you're looking at screens. You're out there seeing it firsthand.

David Costar: 12:18

What I think is also important, especially as a more business oriented CIO, is, in addition to understanding how the company functions from an operational perspective, from a financial perspective, what our customers demand from a supplier perspective of us, and all of the different implications that are associated with that, is having a team of people within IT that trust they can speak up and letting them know. It's okay for you to be a smarter technologist than me. You have the answers. I can help you with the business context, the strategy, the direction, the course correction, but I'm depending on you to do your part to educate me and help me course correct when I clearly am going down the path that makes good business sense. But the end, from a technology perspective, does not justify the means. That's something that I've also found in the CIO circles that I have begun to run in is there's a high degree of pride. There's a lot of accomplished technologists that have historically been superior among their peer group and with that brings an air that might create a bit of pause.

Tim Crawford: 13:45

Pause or discomfort in some ways.

David Costar: 13:47

Yeah, I found that to be a very important attribute in being able to survive as a non-technical CIO, as well as being able to execute with a very strong team of technologists that keep me honest.

Tim Crawford: 14:01

Do you think that that is really the future of the CIO role is to be that business leader first that happens to have responsibility for technology? That's the phrase that I've often used. Is the CIO of the future is a business leader first who happens to have responsibility for technology? I use that phrase or that saying because it sets the context of what's important versus what you do, where you focus versus what you do. Would you agree with that or do you see it differently?

David Costar: 14:31

Yeah, I'm biased on that answer Full disclosure.

David Costar: 14:36

I'm probably not being as objective as maybe I should, but, to put it bluntly, I don't know how organizations who are striving to remain competitive in an environment that is changing at not even lightning speed Speed we didn't even anticipate seven, eight years ago, because of the pervasiveness of emerging technology that didn't exist in the public square five years ago.

David Costar: 15:07

I can't see how a company stays competitive if they are viewing the CIO in the IT organization as an overhead cost center. That's only value is providing a stable, secure network with applications that are available all the time. I believe fundamentally that the CIO title information has to be dropped. It has to be innovation, it has to be digital, it has to be capability, because show me a company today that is growing where technology is not at the central nervous system of everything they're doing. I think it'd be hard to find that and I think we're going to find an inflection point if we're not already there, where the CIO is advising on strategy direction in terms of what it is going to take to execute on that strategy, with the data, the security and the enabling technology that will be available two years from now, not what's in the tech stack today, I can't see a successful company that isn't investing in that digital organization as a strategic function survive.

Tim Crawford: 16:34

I passionately feel very strongly, in the same way, that you have to be thinking more strategically about where technology fits in. It's no longer just power and water. It provides a significant value. That leads me to the next thing I want to touch on with you, which is this concept of digital transformation. I personally am washy on the term. I'm not so sure.

David Costar: 16:59

An retired term Yep. I'd love to see the meaning of it one day.

Tim Crawford: 17:04

I guess the reason why I'm maybe a little washy on the term is just because what does it mean and why does it matter? Some suggest, oh well, we have to upgrade, we have to get rid of technical debt, we have to do this, do that modernize? Does that address some business outcome just because you can go faster? How do you explain that to your CEO? I don't know. I think my question to you is what's your take on digital transformation in terms of what it is, why you think it's so popular? Should we be moving on? If so, what should we be moving on to be talking about?

David Costar: 17:45

I'll start with why I think it's so popular. As a former big four consultant who loved to find a term that would stick to help me get a proposal in and to help sell a project.

Tim Crawford: 17:58

And a two-by-two box to go with it.

David Costar: 18:00

Yeah, exactly yeah, Put in the door. Digital transformation it is an awesome sounding term. I wish I came up with it in trademark. It's like Phil Jackson with 3P right, it just works and it's stuck.

David Costar: 18:15

But I believe that the reason it's popular is every organization, most organizations have identified, whether it be willingly or reluctantly, that significant change to its traditional business operations is afoot, and that's scary, it's overwhelming. It's easy for let's face it service providers, software providers, consulting service advisors to encapsulate all of that work into a catch-all phrase of digital transformation, which rolls off the tongue. My view, though, tim, is, if I just think about my own career, my first digital transformation effort was in 2001 at Turner Broadcasting, when we were implementing a global applicant tracking system as part of AOL Time Warner, their enterprise, across all of their divisions. We were implementing Brass Ring, and it was one standardized set of business processes, interfaces, structured data across the entire AOL Time Warner global ecosystem.

David Costar: 19:36

Now that dates you and I right, because we even remember AOL Time Warner, but it wasn't called digital transformation. It was called business process improvement. It was called finding ways to be more effective and more efficient and provide higher quality service to deliver value to the company. Just so happened, it was in the realm or the domain of HR. That work hasn't changed. It's just the technology, the speed and the names that it's given is what has changed.

Tim Crawford: 20:11

We transition that into thinking about these big systems, because I know you've had to deal with some of these really big systems ERP systems, et cetera of late. How do you see those evolving under these changes in the role of IT, the role of the CIO? I mean the change in that space has been hard. I also want to bring AI into the mix, because I think I'd be remiss if I didn't add AI into every sentence that I mentioned. Where do these big systems fit in? Can we change them or should we change them?

David Costar: 20:46

You and I had the benefit of some hindsight on this kind of work, but I would. This is a tough one. I'm trying to think how to keep this above board. If I were advising our board, or if I were advising another CEO or CIO, or you and I were just sitting having a cocktail and reminiscing about what the future looks like, probably the first thing I'd say is changing a system doesn't fix your problem. If anything, changing a system magnifies the problem. It's almost like in a bad marriage buying a new house doesn't fix the marriage, it just extends it for a little bit. So at the end of the day, the business runs based on how well its operations function. Now a lot of technology, whether it be the big ERP or the big ERP, the big ERP, the. There was a day where big ERP would come in and streamline that functional operation better. Then we had RPA come out. Rpa came out and that basically just automated not great processes.

Tim Crawford: 21:57

Yeah, it just made bad processes go faster.

David Costar: 22:00

I would say the biggest lesson learned I've had through this whole journey called a career, and even at will speed is it's so tempting to fall into the trap of changing a system, whether it be changing out a system for a new system. I'm using system as kind of a ubiquitous term application, infrastructure, cloud versus on for all of that. You know, in this one term called system, changing out a system or changing the makeup of the existing system is going to fix the problem. Conversely, working alongside with the business stakeholders hearing the system is not working, the system is broken. Ai aside, systems today just do what they're told.

David Costar: 22:52

A system is a car that doesn't have autonomous driving capability. It steers where you steer it and it keeps going until you do something different to cause it to react differently. A system is the same way. So you got to start with that business setup, structure, discipline, governance, all of the what I think are the foundational pieces of how the business operates, and then figure out the right way to overlay a system. On top of that, now let's just call big ERP. Can we'll big ERP change?

Tim Crawford: 23:31

I think they're going to have to right. Well, I think if I go with what you're saying, I mean you have to understand how your business is evolving, and the systems similarly have to be able to evolve and change with it. I think the one piece that we've been seeing, though, is that the rate in which our businesses are changing is increasing. The velocity is increasing. Can the big systems change and that's, I think, that's an open ended question of are they going to be able to change? I think, historically no, but there was a tradeoff between what some call kind of institutionalization or industrialization. There was a degree of stability that came from those systems, and that was a good thing. That was absolutely a good thing, but maybe there's some middle ground here of shifting that we have to be thinking about, but I like your thinking of starting with the business first and then figuring out how the other piece comes in.

David Costar: 24:27

I think what you and I and other CIOs we are at a point where we're going to have to learn a new playbook ourselves. The business pace is not going to put up with a CIO saying no, no, no, hold on. We have standard release cycles. I know you need that right now, but we need to look at our demand management and understand when we can get that in, because we need to go through this, that and the other step and governance. Those are important disciplines, but how those disciplines get incorporated into a much more agile business environment is what I believe we are going to have to learn how to do differently and, subsequently, how these large enterprise systems are going to have to either learn how to enable us to do it differently or get passed by new entrants.

David Costar: 25:28

Because if we just think of the big ERPs today, I can think of one or two that were new entrants 15 years ago, that spawned off of a big ERP 15, 20 years ago and they wore the disruptor. Well, now they're the barge that is really struggling, turning around, and there's some new ones coming out there. And then AI is a complete game changer. I mean the fact that Bing, is it sure, is the search engine I'd go to today, and I don't know if I'm allowed to say that or not, but who would have thought that paradigm shift would have happened within a matter of six months? The pace it's happened. I think the same thing. We have to look at ourselves in the mirror, cios, and say we have to get this new playbook ready and we've got to be able to shed some of the shackles of our past trainings and teachings, because it's just not going to be suitable for what business demands tomorrow.

Tim Crawford: 26:31

I love it. We're getting toward the end of our conversation for today, but before we wrap, you all carried away.

David Costar: 26:37

Tim, You're asking me questions that I care deeply about.

Tim Crawford: 26:40

Every time we talk, I learn something new, and I love the way you think about this, because you don't come from that traditional IT background. I wish more people would really embrace a different way of thinking, because I think we all could learn from that, and so I welcome the time we have. Unfortunately, we only have so much time for this episode, but before we close, I want to ask you one last question, which is is you think where you go from here and what excites you about the future? What comes to mind? What are you looking forward to? And this is a bigger question than just the CIO roll, bigger question than just Wolf Speed but what is it that gets you excited?

David Costar: 27:24

looking forward, what I love doing. I'll answer that Because I've always been someone who you know. If you look at my career path, it is a zigzag pattern, that it is not a straight line by any means. I have always been drawn to an environment or a challenge where there is a high degree of skepticism that I can actually succeed in it, and I know that's kind of you know, motherhood and apple pie what drives me right now. What I get really excited about and I just finished an AI certification course online with Wharton man I'm so excited to see how far AI disrupts how a business functions and even to a point of you know, I think of you know topics like data visibility and data transparency and sharing across the supply chain. Like that stuff's happening. That's not emerging themes of tomorrow. The emerging themes of tomorrow is a tech stack even needed to be an innovative business.

Tim Crawford: 28:33

Ooh, let's get provocative.

David Costar: 28:36

Does the whole license subscription go out the window and the gig environment exists for, you know, hiring professionals. Does AI create this entirely new paradigm that forces a business to change how it operates? That creates businesses that we haven't even dreamed of yet? You know, as a CIO, I get excited about the prospect of sitting with commercial customers, commercial prospects analysts like you and partners and figuring out how are we going to reinvent how our entities interact with each other. That's what excites me. You know the bits and bytes. I'm not your guy, but being able to marry the business strategy execution with enabling technology and what the prospects of AI bring, you know where to point.

David Costar: 29:40

This is kind of the dot com bubble. I mean, tim, you and I were working in the late 90s, right, this is kind of 2.0, if you will, I mean industry 4.0. But this is that dot com internet boom parallel that I think nobody knows where it's going. Well, I'm going to be damn sure I'm one of the ones that's on the forefront of it, because it's terrifying, it's exciting, but it's challenging and it's causing at least synapses in my brain to fire that haven't fired in a while. And why wouldn't you want to be a part of something that is going to upend traditional business models. Why would you want to be a recipient of that? Why not be the initiator of it?

Tim Crawford: 30:26

I love that. We're going to have to leave it right there, David. Hey, that great conversation. Love the insights. Obviously we could go on for a long time, and maybe that's where we pick up for the next time. Thanks again for taking time to take part in the episode.

David Costar: 30:43

Thank you very much, really appreciate it.