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.

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”.

No Better Time

I believe that there is “No Better Time” to be a CIO than now. If there is one role in the executive suite that will have impact in the next five years it is that of the IT leader. There has been a lot of discussion about what the “I” in CIO should stand for (Integration, Innovation, Intelligence, etc.) but more on that in another blog post.

The CIO can drive both the top and bottom lines of an organization – we just have to get our ideas out, and be effective players in the leadership team. It’s all about adding value.

This, and my next blog entries, will talk about:

1.       What you can do about the top line

2.       What you can do about the bottom line

3.       How to be effective on the leadership team – leadership traits of great CIOs, strategies for effectiveness, etc.

How IT leaders drive the top line – grow the business:

My fundamental premise is that the objective of any business is to find and keep customers. Yes – this needs to be done profitably, etc., but I want to keep it simple for now.  I know there are nuances to each sector; finance, healthcare, manufacturing, and technology are often very different, so please forgive me if all the thoughts don’t apply to you, but some will. Here they are – in no particular order:

Find customers.

  • Think about where you can add value using the simple matrix: Existing Products in Existing Markets then expand to New Products in Existing Markets, Existing Products in New Markets and New Products in New Markets.

axis graphic blog one

  • Spend time with customers. Talk to clients and your counterpart CIOs to understand their challenges. You are not coming with a “salesman” card, and can be really useful to your organization if you are listening to the customer and know your own business.
  • Eat your own lunch/drink your own Champagne. Many IT departments are test beds for their company’s new products – and then become key in selling those products externally. Particularly true for technology companies (maybe not so effective for restaurant or winery business – pun intended!!). If you don’t do this – see if there is a way to get on the revenue generating side of the business, so you are not just a cost center.
  • Develop analytics capability. This can uncover real value – see matrix above.  There is a lot of talk about how the CMO and CIO may be at odds. This may be the case if you are not leading. Go to the CMO, show what analytics can do for product, revenue stream enhancement, customer analysis, etc. The opportunities are enormous.
  • Big Data. Kind of the same point as above, but not quite. The above point was “Small Data” and many companies still have to figure out what to do with what they have. Get the architecture right, and then select a decent analytics partner. Once Small Data is conquered then move to Big Data. There is a lot of hype now, but the opportunities are amazing. Check out what Bill Ruh is doing with his GE group in Silicon Valley; which is one of the more compelling use cases for big data that I have seen.
  • Mobility. Many customers want the option of dealing with you from their smart devices. This is a great opportunity for IT to be a leader in tapping into new revenue streams.
  • Social. A lot is being written about how social business can drive both the top and bottom line. Think this through and get a plan in place. There are some amazing ways that social platforms are impacting organizations; because this is the way people get stuff done. I believe that this is one of the ways that the cost of healthcare can be reduced – by managing habits and choices via social media so that people live healthy lifestyles.
  • Be thoughtful about how you participate in acquisitions. Many organizations need to grow by acquisition, and the IT leader can have key strategic input in explaining (or motivating) how an acquisition can be synergistic from a product and market perspective. You will need to integrate the company being acquired – so think that part through clearly as well. Put a playbook in place.
  • Be a key facilitator around innovation. Depending on the nature of your organization you are either a key driver of this, or need to create the environment to allow innovation to take place. Much of today’s innovation is technology enabled – so you need to know your industry, understand the drivers impacting it, and then create a world that fosters innovation. This is a big topic, and one for another time, but there are two potential paths to success: bottom up or top down. I will unpack these in a future blog.

Keep Customers

  • Execute. Get the right platforms in place – then harmonize and leverage business processes to deliver to customers in the most effective way. More on this in the next blog.
  • Work across the business to ensure speed. Some pundits want to rename the CIO – Chief Acceleration Officer – silly perhaps, but the concept behind the name is excellent. Velocity is really important.
  • Customer service. IT can play a key role – using technology. Figure out how you can make IT a strategic weapon in the delivery of customer service.
  • Continuous product and quality improvement. Through analytics, innovation, etc.
  • Reduce cost.

The constant question the CIO should ask in both finding and keeping customers should be this – how can I add value?