136 Year Old Johnson Controls Has A Plan To Become Digital To Its Core

October 18, 2021
Peter High
BY Peter High Founder and President of Metis Strategy
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Most companies of consequence have a chief information officer. Many others have chief technology officers, who might be the heads of product and engineering for a tech-centric company, or, for some non-tech sector companies, might be the heads of infrastructure or tech-savvy leaders reporting to less technical chief information officers. A growing number of companies have chief digital officers, as well, often signaling the need to have an executive oversee digital transformation efforts exclusively. There are examples where the top tech and digital chief has one or a combination of these titles. The combination of all three roles for three separate executives occurs less frequently, needless to say, but less frequent still are examples of companies with execs with these three titles each of whom report to the chief executive officer. One such company is Johnson Controls.

Johnson Controls is a 136-year-old, Milwaukee-based company that develops products and services that enhance the intelligence of buildings to the tune of nearly $30 billion in annual revenue. Mike Ellis is the company’s chief customer and digital officer, adding customer responsibilities to the CDO title. He joined Johnson Controls in October 2019. Diane Schwarz is the company’s chief information officer, who joined the company in August of 2020. Finally, Vijay Sankaran is the company’s chief technology officer, and he joined the company in May 2021.

Ellis describes his role as chief customer and digital officer as deciphering the impact of the company’s efforts on customers, engaging them to understand what is most important to them. The goal is to innovate in collaboration with them, identifying ideas that will make a difference in their operations. Additionally, Ellis is responsible for digital product innovation and enterprise marketing, as the CMO reports through to him.

Schwarz has been a CIO multiple times over at companies like Hunt Consolidated and Textron. She has what she refers to as the traditional CIO purview of infrastructure, applications, and websites. Beyond that, she owns the customer experience, including “how our employee operates with all of our applications, how they get the day-to-day job done,” she noted. Schwarz added, “Mike owns the customer’s experience with our products, but then when you have the overlap of the Venn diagram, as the customers interact with portals, billing and how to schedule a ticket for field service; that’s where it goes back into the CIO responsibilities. It’s not, black and white to say that everything the customer interacts with Johnson Controls is under Mike’s umbrella. We have to navigate what really is the product experience versus the application experience.”

Sankaran has also been a CIO previously at TD Ameritrade, where he also ran an innovation program for the company. He oversees products for Johnson Controls. “When we think about product, it’s really the game-changing part of what’s going on in our industry right now – the software part of that product,” he said. “[We work on building] the right thing and build the thing right. My focus is all around building the thing right and building out a world-class digital software engineering organization at Johnson Controls.” His team’s focus is on edge Internet of Things (IoT) through a software and data platform called Open Blue. It is a platform that allows Johnson Controls’ customers to drive energy efficiency and sustainability by managing their spaces, smart buildings and then applying artificial intelligence [AI] and machine learning [ML] to be able to generate those insights. This creates a closed-loop so that we fully get to the smart autonomous buildings.

“We’re building the software and all the connectors and the data structures and the AI models in my new organization to support that and work closely with Mike around the customer needs and experiences, and closely with Diane’s organization around the broader ecosystem of service and support and infrastructure and cybersecurity to make sure that the pieces that overlap in that Venn diagram come together seamlessly,” noted Sankaran.

The group that now reports to Sankaran to bring this to life used to partially report to Ellis, who recognized the value in unifying the edge software engineering capabilities together with the integrated Open Blue platform. This has proven to be a strategic differentiator for the company. Sankaran has accelerated Ellis’ vision by implementing the scaled agile framework across the group to accelerate speed to market.

Schwarz noted that a key to determining where one’s responsibilities begin and the next one’s ends boils down to solid communications both informal and formal. “We absolutely get that we need to work productively on figuring out the handoffs and providing clarity to our teams,” said Schwarz. “[We are] a company going through a huge transformational shift to become digital to the core. The kinds of problems that we’re solving are new to the organization.”

When asked about the formal structures in place to facilitate the forging of strong bonds across the company, Schwarz offered the example of cybersecurity. There is an enterprise cybersecurity group, which reports to her, and there is a product cybersecurity team that reports to Sankaran. Though there is some overlap between what they do, they are distinct disciplines. Schwarz and her enterprise chief information security officer (CISO) attend Sankaran’s product cybersecurity briefings, and likewise, Sankaran and his CISO attend Schwarz’s enterprise cybersecurity briefings. This is indicative of a broader desire to keep each other informed especially in the areas where roles overlap.

Ellis notes that the approach Johnson Controls has taken in defining these roles and responsibilities has facilitated the 136-year-old company moving from industrial speed to the speed of a software company. It speaks volumes as to the company’s commitment to a digital future that it has three leaders of such consequence reporting to the CEO of the company. To have that degree of digital sophistication represented at the executive level bodes well for the company to accomplish its goal of becoming digital to the core.

Peter High is President of  Metis Strategy, a business and IT advisory firm. He has written two bestselling books, and his third, Getting to Nimble, was recently released. He also moderates the Technovation podcast series and speaks at conferences around the world. Follow him on Twitter @PeterAHigh.

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