Is the Chief Digital Officer a real thing?

I have been doing a number of Chief Digital Officer (CDO) searches recently. My first reaction to a CDO search inquiry is, if you want a CDO, you don’t have a decent CIO. But it’s not that simple.

The real question to ask is this: How is your business dealing with the opportunity of digitization? All businesses are being impacted – both at the “core” and “edges”.

My definitions:

Core = your internal processes.

Edges = data that is external to your core, is customer related, and hugely impactful.

*Core and edges eventually merge into a Platform – which your CDO should build toward.

Digitization = Big Data/Analytics, AI/Machine learning, Cloud, Mobile, Social, IoT, Bots – all the really cool stuff happening in the world today.

The challenge many CEO’s face is that everyone on his/her team wants money for Technology – the CIO, CFO, CHRO, CMO, Sales, Operations etc. The potential initiatives all have great ROIs, seem plausible, but there is not an endless supply of money – so how do you decide what to do, who goes first, and not end up with stranded investments. So the CEO turns to us to help him/her think this through, and the discussion turns to a CDO – or Digital Transformation Exec (call it what you will).

My view is that the CDO = CEO and team. I don’t think it’s a new function (like a CMO, CFO, CHRO); it is a digital way of doing business and goes to the core of every organization’s business model. The problem is that most CEO’s are not digitally literate, and so the CDO becomes the CEO’s “proxy” for the digital transformation that all companies are addressing. So, it is essentially a transition role – helping an organization go from analog to digital, and once done, the CDO should take a role on the SLT, or move on. Depending on industry this “transition” can last 3 – 7 years.

What does the CDO do?

  • That obviously depends on industry, but like all transformations, s/he should have both quick wins and also a long term strategic agenda.
  • Core activity. Understand how digital can change core processes. AI, Bots, etc. I can’t wait to see how Amazon rethinks the core processes of Whole Foods. For healthcare – using data (internal and external) to help with diagnosis so Doctors can spend more quality time with patients.
  • Edges. There is often more customer data outside the organization than inside. How do you partner, ingest external data, and create algorithms to assist in delivering value?
  • Interact with customers the way they want. Web, Mobile, Social, Augmented Reality, Bots, etc.
  • Craft the digital roadmap. This is the long-term strategy and involves technology, business processes/architecture, and generally educating and helping the SLT see how the business might transform.
  • Ensure that the digital roadmap supports the core purpose and goals of the organization as articulated by the SLT. It is important that the CDO work in collaboration with other members of the team – as this role may be perceived as threatening and disruptive.
  • S/he can have the CIO report in, be the CIO as well, or sit outside IT. What you don’t want however is for the CDO just to be a glorified CIO and get sucked into IT stuff all of his/her time.

What does a CDO look like? What is the best background for her/him to have?

Here are some thoughts:

  • Ability to lead transformation – horizontally. As seen above, the CDO must digitize the core as well as the edges. A systems thinker.
  • Ability to articulate a strategic vision.
  • Technical chops to understand and evaluate tech trends and see how/where they might fit. Need the ability to articulate a corporate digital roadmap and architecture.
  • Communication/evangelism/charisma. All organizations are becoming tech organizations and the CDO must have the ability to inspire his/her peers to see the benefits of moving toward this new reality.
  • A background rooted in some type of digital consumer-oriented business. Preferable is for him/her to have led a digital transformation in such an organization. Second is to come from a pure play digital business – she/he will “get it” but won’t have gone through the learning of a transformation.
  • Patience, organizational savvy, and fortitude. To understand how to manage and push through on the change agenda. Collaboration with peers, support, and buy-in from the CEO.
  • Consumerism. We all experience daily the Apple UX with Amazon fulfillment/backend – it is what we expect from everyone we deal with. The best candidates have been key players on this digital journey and understand where the opportunities/road bumps are to be found.

Mobile Consumerism – The Center of Everything

It used to be that we, consumers, would have to figure the best way to deal with organizations from whom we wanted stuff – cars, insurance, clothes, groceries (gather those coupons!), doctors, hospitals, government agencies – but that has changed. The mobile consumer is now firmly in the driver’s seat.

I am a headhunter, and spend my time helping senior executives build teams that need to address a changing world. Most of the change is being driven by technology, and my passion is to get innovative technology leaders to advocate/enable/cajole organizations to transform themselves to meet these new challenges. The other side of what I do is to help build teams that address the new world where consumers are acknowledged to be the center – interacting with organizations that want their business. Please don’t be confused – EVERY organization is becoming a consumer driven, even organizations that think of themselves as B2B.

There is, however, an increasing demarcation. On the one hand – existing organizations are trying to meet the needs of the mobile enabled consumer, i.e. anyone with a smartphone. Let’s call the organizations wanting to serve the mobile enabled consumer “Outside In”, because the consumer is outside, figuring out how to “get in”. Conversely – new organizations are set up to place the consumer at the center, where the consumer decides who s/he wants to deal with, and on what terms (let’s call them “Inside Out”).

No industry is spared this new reality, but some are adapting quicker than others. Those “Outside In” organizations that sell to consumers already are ahead of the pack (e.g., clothing retailers). They are adept at understanding their customers by amassing large amounts of data internally and externally (Big Data) and targeting the consumer individually on his or her mobile device. The retailers who still have a large store presence (the magnet that drew in consumers with coupons in hand) are getting hurt by those who sell on line, mostly via mobile channels (they call it Omnichannel – but mobile increasingly dominates). For an example – compare Sears to Macys/Macys.com. The retailer that is really dominating is Amazon (an “Inside Out” business) where you can buy anything from your mobile device and have it delivered – wherever and whenever you want it. Who needs a store?

I have a particular interest in Healthcare as I believe technology will impact Healthcare more than any other industry in the next 10 years. Think of wearables, IoT (Internet of Things) data from hospitals/clinics/implants, electronic medical records (that are portable on your iPhone), telehealth (where you can consult a doctor via video conference), individualized healthcare based on your DNA, notifications (to ensure drug adherence) gamification, social media, 3D printing for med devices, and much more; it is truly mind boggling!

There are two basic ways that we, as consumers, can interface with healthcare. The traditional approach of employer provided insurance with the network of doctors and hospitals with whom we do our best to engage (Outside In). There are many variations to this theme, but there is another approach entirely; it is the “Inside Out” or the “Uberization” of healthcare. Uber lets you get a ride on your terms. There are providers/drivers, and when you want a service, Uber connects you with the driver, and also lets you select the quality of the ride (Share, UberX, Uber Limo, etc). You are at the center – and the service/product bids for your business; payment is known and automatic, quality is understood and there are quick feedback loops – open to the next consumer. Another example is AirBNB where similar parallels can be drawn. This “Inside out” trend, where the consumer sits in the middle and makes decisions is starting to happen in healthcare.

There will soon be a proliferation downloadable applications that will enable you to be at the center of your healthcare decision making – where doctors, hospitals, and anyone providing a health/wellness related service will bid for your business based on price and quality. We won’t get there overnight, as there are tremendous forces holding the status quo in place: regulation, reimbursement rules, government incentives, state regulations, sunk investments, tax incentives (why can an employer deduct the cost of healthcare and an individual cannot?), and many more.

The movement is inexorable; consumers with smartphones want to be in control of their lives. They are savvy, connected, inquisitive, and value driven. They don’t want to rely solely on a “system” they don’t understand, and are increasingly placing themselves at the center of things, and choosing with whom they wish to interact. Mobile, Big Data, Analytics, IoT, Social Networks, Secure Cloud-based Storage, an App for Everything – these are the technologies that will dominate the landscape for the next 5 – 10 years.

Mobile Consumerism is affecting every business. Are you an “Inside Out” or “Outside In” organization?

What are you doing? It’s your move!

The Most Important Leadership Quality

Is there one? There are innumerable books, masses of research, and a plethora of answers telling us about the hallmarks of successful leaders. I love Adam Bryant’s 5: passionate curiosity, battle-hardened confidence, team smarts, simple mindset and fearlessness.

Here are some other qualities you will see as you comb the web: honesty, communication, delegation, humor, confidence, commitment, creativity, intuition, inspirational, positive, motivational, persuasive, persistent, patient, organized, flexible, people oriented, IQ, EQ etc. there seems to be no end!

But is there something that underpins all this? Is there a single thing that provides a foundation for all the rest? Here is what I think. AUTHENTICITY.

To be authentic you must have grown as a person, made your own mistakes, had your own successes – and be open and candid with others about who you are. You must understand your own journey and be comfortable with your own strengths and weaknesses.

I am a head hunter and for me, determining if a leader is authentic, is the main thing. Testing for technical capability and particular skill can be relatively straight forward. You have done it, have the education, or work in a company with a reputation for being good at it; we can read it in your resume. But what about how you function – those qualities listed above – is that really you, or are you wearing a mask?

Getting a candidate to take off the mask and show who he or she really is – that is what all good head hunter’s strive to do. And mostly it’s about blood. Blood or scar tissue. I often ask candidates to talk about both successes and failures. Successes are great, but if you have never failed – you probably never took on big challenges where you really needed to step up and learn – not only about the task, but more importantly about yourself. I want someone to reflect on their own growth and development and to have an appreciation of self, such that they can be authentic with others. People get to know if you are genuine or authentic – either very quickly, or over time. And if you want to be able to exercise all those traits mentioned above I believe that you need to be authentic.

Advice: Take on all the challenges you can; stretch assignments, overseas gig’s, management tasks outside your specialty, the stuff others are scared of. Push to see who you are, be self-reflective and humble, and you will develop an authenticity that will set you apart.

What is The Purpose of Every Company?

Shaking Hands 1

My simple definition is this: To Find and Keep Customers.

Why is this relevant?

If you are part of senior leadership (SLT) and you don’t know where you fit in this definition, you are not adding value, and you are not relevant.

I am a head hunter and focus on CIO’s and the companies that sell to them. The role of the CIO is changing from “leverage” (the bottom line) to “customer” (the top line).

If your job as CIO is not deeply involved in “finding and keeping customers” – do something quick, because you are not relevant right now.

If you are a CIO and don’t want to be irrelevant here are some tips:

  1. Make sure the leverage stuff works. If the base systems aren’t functioning, you won’t have credibility and no one will listen to you.
  2. Know the business. If I eavesdropped a SLT meeting would I peg you immediately as the CIO? What I should be hearing is a thoughtful and engaged business executive talking about the “art of the possible”. Contributing on all issues; deeply knowledgeable about IT.
  3. Don’t be boring. Too many CIO’s look and act like geeks. Don’t drone on about technical stuff – it just puts everyone to sleep. If you want to influence the SLT and Board – be compelling.
  4. Be a talent magnet – which presupposes strong leadership (more on this in another blog).
  5. Learn all the time. Be curious, connect dots, connect with people, etc.
  6. Be authentic. This is for everyone (I will unpack this in another posting).
  7. There are other factors – but I am trying to be brief – and not boring!

There is no better time for CIO’s to be involved in “finding and keeping customers”. The technology is there, and senior leaders want your contribution.

PWC says that CEO’s are concerned about 5 things: Security, Mobility, Analytics, Cloud and IoT. If you can’t find something in there to help your organization find and keep customers – perhaps you should rethink your own purpose.

Why Aren’t There More CIO’s On Boards?

PWC put out a study in 2014 to say that the top 5 things that keep CEO’s awake at night are: Security, Mobility, Analytics, Cloud and IoT (Internet of Things). They are all technology related, and yet if you look at Boards, you find few CIO’s. What’s going on?

Don’t get me wrong – there are CIO’s on Boards. Our firm has been involved in a number of searches where forward thinking CEO’s and Nominating Committees have taken action. Hats off to them. But why isn’t everyone doing it? Security is a key topic in the Boardroom, and every CIO I know is spending more and more time with their Boards, talking about what the company is doing. Hiring a great CIO is definitely part of the solution, but having a CIO on the Board is the next logical step.

Companies increasingly acknowledge that they are technology businesses. Early on FedEx realized this – the data about the package are as important as the package. A CIO I know said – “we are a technology company with wings”; an insurance CIO said “we are a database and software company operating in the insurance space”. Technology is increasingly at the core of the purpose of organizations. I have a simple definition of the universal company purpose – “to find and keep customers”. CIO’s used to be “leverage” – harmonization, standardization, cost reduction, but now they are “top line”. And if they are thinking top line, then my contention is that any major corporation needs to have a top caliber CIO on its Board.

In one organization where we placed a CIO on the Board, the CIO of that organization said to me “I am nervous about having someone who really knows IT at the Board level. My life may become miserable!” but a year later she said “it is the best thing that has happened to our company. I now have someone on the Board who understands how technology can enable, and helps me explain the technology journey, but with the credibility of an insider on the Board team”.

Reboot IT

This blog is a summary of thought from a CIO group that I have the privilege of moderating. They are the top CIOs in the Bay Area – so this is relevant. Not sure I agree with everything, but it is thought provoking.

Why Reboot IT? There are many reasons – here are a few:

  • Outsourcing is broken. It doesn’t reduce cost much, but does reduce flexibility, innovation and accountability.
  • Integration and customization = huge complexity, and you can’t introduce cool new stuff to meet the business needs because you are in the land of Lilliput.
  • Waterfall methodologies are arcane.  Slow, costly, etc.
  • It’s really hard to measure value.  Conversations around IT are often directed toward cost-saving, whereas they should include deep discussions around revenue generation as well – see my IT Benchmarking blog (published 9/13/13).

So – what’s a CIO to do?

The simple answer is that the IT department must be just like a technology company with products.  The head of development is like the VP Engineering, and should be supported by Product Managers who are responsible for the various offerings (Think as if you are Workday, Salesforce, etc., building commercial products – for internal use).

Technology Choices:

Build with the Cloud in mind, Web scale resilient apps, open source, embrace mobility (the form factor of a PDA screen requires a different development approach to apps delivered on PC and Mac/iPad), build everything scalable, and embrace choice.

How should you run IT?

  • Agile, self-directed project teams of 6 – 12 including product, technical and iteration management and developers.
  • Create product and service lines.
    • E.g., a product could be a CRM platform that would be charged to the business and handled like any other product.
    • Help desk would be a service – measured by cost and value (customer satisfaction).
    • Follow agile and/or scrum-based software development methodology for both custom and off- the-shelf development.
    • Follow product lifecycle – eliminate less used products.

 IT Department – Principals

  • Flat hierarchy: 8 – 15 directs with teams being self-directed.
  • Hire engineers capable of building products for commercial use.
  • Managers should have a combination of skills: leadership, business, and Technical.

What should an IT organization look like?

  1. Shared services group comprising IT:  infrastructure, security.
  2. Office of the CIO: focus on metrics, portfolio management, communication, finance.
  3. IT Operations: Problem, Change, Incident and Release management. First and second level support, NOC, Help Desk.
  4. Product Management. Strong business relationships, understand customer demand and translate into features/initiatives.
  5. IT Development. Services-based platform development of the products tied to capabilities, continuous delivery and deployment, modern tools, develop in-house capability (muscle memory).

What should you measure?

  • In a word – everything, with the objective of tying business capability enabled, to the benefits realized.
  • Build a big data store and capture logs, telemetry, capacity data, metrics, adoption data, incident management data, financials, etc.
  • Build BI on top so decisions are increasingly based on data, e.g., – products should have telemetry and adoption logging so you can see which features are being used and how.
  • Business pays for products and services delivered by IT on a usage/consumption based model. If product is not used, reduce support and then scrap.  This forces IT to be cost and value conscious so it can compete with SaaS products.

IT Benchmarking

Is IT benchmarking total garbage?

IT is often benchmarked – on cost, performance, strategy, all kinds of stuff – but why?  Ostensibly, it is to know where IT stacks up, justify a budget, increase a budget or cut a budget. You can benchmark almost anything. But what underlies the urge to benchmark?  Here are some thoughts on the subject, gleaned largely from the ideas of members of a CIO Forum that I have moderated for the past eight years in the Bay Area.

Business leaders have external pressures – mostly exerted by market forces. They have to deliver a decent product/service at a competitive price or they simply won’t “find” or “keep” customers (see Blog Archive: Driving the Bottom Line posted 5/30/13).  Their feet are regularly toasted at the fire of stiff competition.

When benchmarking comes up at the request of business leaders it is usually their attempt to hold IT’s feet to the fire.  They want a lever that will drive IT, something like the market levers they experience. Benchmarking is an easy sell, and the IT consulting firms play to this by hyping what benchmarking can do.  Well, the truth is, benchmarking will do whatever you want it to do – or whatever the person paying for the benchmarking wants it to do.  No two companies or industries are alike, so you are never going to get apples with apples. Cynical, but reality!  IT shops that are in exactly the same industry, but have different legacy systems, can be at totally different places when it comes to business initiatives.  One can be in SOA heaven, the other in the land of Lilliput – where Gulliver was held down by a million tiny wires.

And what’s more, if you look at IT’s performance/value per dollar invested, it typically far exceeds the value from investments in other parts of the business.  Consider this, does Marketing or Manufacturing have ROIs like IT, or can they cut costs and improve performance like IT?  Not often.  If you have business customers who are demanding a benchmark – there is probably something else going on.

So, before your organization embarks on a pointless, costly, in-fight producing, overly broad or irrelevantly narrow, inaccurate, and immaterial benchmarking activity, take a step back and try to figure out what is really driving the “urge to benchmark”.

The Answer:

  • Figure out what levers you can give your business partners so they feel they have some control. (More on this in a later Blog – Consumerization or “I want” IT is already in the front room).
  • Be more strategic – lead the charge. See Blog Archive: Driving the Bottom Line posted 5/30/13.
  • Report your historic performance.
  • Keep your own benchmarks, so you can trot those out regularly.
  • Be totally transparent.