Article written in partnership with Roger Beynon.
Whether they are spooked by the specter of "digital disruption" or just afraid that the bandwagon will leave before they can jump on, organizations are desperately looking for C-level talent with digital credentials.
"Digital credentials," however, can cover an array of competencies, and organizations have produced their own array of titles for the potential occupant of the newly allocated "digital corner office."
A quick search on LinkedIn illustrates the title diversity among the digital leader cohort.
So which title will win the battle for the digital corner office?
The answer, we suggest, is to be found not so much in the title as in the role.
Interviews conducted with 100 C-level executives over the last 12 months reveal that the "digital leader's" mission can differ widely from company to company. At retail clothing chain, for example, digital leadership means weaving technology seamlessly into the purchase process. At a hi-tech manufacturer, the job of the VP, Digital is to bring discipline and message coherence to the company's marketing and social strategy. At a century-old furniture manufacturer, digital leadership means process reengineering from the shop floor to the top floor.
Variations notwithstanding, the business imperatives behind any digital transformation strategy dictate a set of responsibilities that begin to define the role of a "generic" digital leader. Those same executive interviews point to a set of priorities common to the adoption of transformational digital leadership:
- Developing the next generation P&L and driving, if necessary, corporate-wide self-cannibalization. (Digital transformation must manifest itself in the P&L or it's not worth the effort.)
- Facilitating horizontal transformation and digital literacy within a company. (The effective digital leader should work him/ herself out of a job, once the organization is digitally positioned.)
- Hacking the product/service requirements loop to understand what customers will need and what they will pay for. (Before these requirements become known to the competition.)
Given these priorities, how do the top-level digital titles and their accompanying responsibilities match up?
- The Head of Digital Innovation/ Chief Innovation Officer focuses on exactly that - innovation. It is typically a job for an out-of-the-box thinker, but not necessarily someone with P&L experience.
- The VP, Digital tends to occupy a marketing communications role. "Digital" is often synonymous with using technology to build ever higher levels of social engagement with an emotional attachment by the customer. That said, a VP is often someone who has General Management experience that qualifies him/ her for the P&L requirements that underpin the digital transformation imperative.
- The Chief Data Officer owns Big Data in whatever form that takes for any given organization. Big data can certainly help shape digital transformation but the Chief Data Officer is unlikely be the driver of change.
- The Chief Technology Officer tends to be an inward-focused role, essentially a facilitator and coordinator of the technology next generation infrastructure needed to meet the rapidly changing needs of the CTO's internal customers such as the CIO.
- The Chief Information Officer may, in isolated cases, don the mantle of transformation agent, but the CIO role is rooted in maintaining service stability and continuity. Disruption is anathema to the CIO and asking them to embrace change as a way of life would, in most cases, would be asking for trouble.
The executive interviews point to the CDO as the title most aligned with the digital transformation mission. Here's why.
To point #1 (inventing a new P&L/cannibalizing the old):
The digital leader is often brought in with the single focus of preventing her/his organization from being the victim of digital disruption - to the point of going out of business. Richie refers to this as "preventing companies from having their Kodak moments" - more currently, their 'Zune Moments'". This can involve radical self-cannibalization in the way that you see right now with GE, which is divesting itself of financial companies and transforming its commercial and industrial portfolio into a model for the Internet of Things. GE has become a software company in the vanguard of the IoT.
Point #2 (working horizontally across the organization):
Any digital leader missioned with company-wide transformation must be able to bring a horizontal purview to the organization and operate across functional silos. To identify, develop, and roll out new digital products or services, the digital leader might need to work with (but have no direct authority over): customers, designers, product developers, finance, marketing, sales, legal, compliance, operations, and customer support. Consider the logistics that confront a 2,500-store grocer like Kroger when it wants to roll out a click-and-collect capability -- adding drive-thru lanes, creating a picking process from an inventory system organized in huge, wrapped pallets, integrating store return credits to customer accounts and inventory systems, etc. The digital leader must bring all the vertically-minded disciplines together and move them toward a digital paradigm. (Richie believes that a digital leader in this sort of role should not have a job in about three years, because they would have worked with the rest of the organization to pivot towards the digital opportunities and make their role obsolete.)
For point #3 (figuring out future opportunities in the marketplace):
The digital leader is tasked with identifying market opportunities that can be best exploited through digital execution. To be able to see opportunity before it becomes visible to others, the digital leader must be able to work with and win the trust of customers. The digital soothsayer must divine how customers are internalizing technology-driven paradigm shifts, since those shifts will generate future requirements. IMS Health's customers include the major Pharma companies small, large, regional and global. Richie works with Pharma companies to figure out their own paths toward transformation and in doing so is able to capture their aspirations for the future. He then interprets those aspirations and delivers them to the IMS Health's digital product team to be able to build the company's next gen P&L.
The digital leader must therefore operate (and be welcome) on the customer side as well as the product side. This, as describe by Richie, differs significantly from product development practices of the past, in which "our product guys build whatever the hell they think the future is going to be and it's left to the marketing team to describe it in a way that makes sense to customers who don't really want the product but need to be convinced they do."
What are the characteristics/competencies to look for in a Chief Digital Officer?
Companies can hire and allocate digital responsibilities to any and all the titles listed above, but if the transformation imperative covers the entire company and is seen as essential to survival and success, then they will more than likely want to hire a Chief Digital Officer. For what, therefore, should they be looking?
The research identified these primary attributes:
1. A technologist who is fluent in business:
The CDO will typically have computer science or engineering as a first degree, often bolstered with an advanced degree in business and a macro-economic world view. At core, they are technologists, but fluent in language and lore of C-suite business because they will have accumulated P&L responsibility along the way. This is important because the P&L perspective guides prioritization. Digital expertise along the whole of the value-creation chain, moreover, allows the CDO to distinguish digital value from "digital noise" and to be able to evaluate opportunities consistently spawned by technology change.
2. An Internet veteran:
This is not a mandatory qualification, but the experience accumulated while riding the Internet wave cannot be overstated. Many CDO's have been involved in the Internet world for 20+ years. The majority of these have climbed the corporate ladder on the back of their technological prowess and then used that prowess to jump from IT to e-commerce to digital innovation and now to digital transformation. Having lived through the most explosive years of digital's relatively short history, they better understand its evolution and have the best chance of anticipating its direction.
3. A skilled, agile communicator:
The CDO must be articulate and persuasive. It helps if they exhibit what one CEO called "contagious confidence." The CDO's motto could be: "It's not hubris if you can back it up." They tend to be acutely conscious of their own brand, and they know its value to their corporate employer. They make digital "cool" for everyone within the organization, not just the geeks and the marketers. The CDO makes digital a corporate an idiom as well as an emblem. As a result, both the brand and the culture carry a different vibe.
4. A digital anthropologist:
The CDO is an observer and analyzer of customer behavior. Their job is to interpret that behavior for the digitally impaired by "parsing" customer needs and aspirations into digital (or digitally supported) products and services. CDO's who have multi-industry backgrounds bring added value to this capability. The more a CDO understands the nuances of parsing customer needs for B2B as well as B2C, or international and domestic, or CPG and electronics, for example, the greater the anthropological asset s/he brings to the hiring company.
5. A risk-taker:
Even though the dominant career path has been along the corporate Internet highway, CDO's often exhibit strong entrepreneurial characteristics and it is not uncommon for them to have started (and sold) their own companies. This background gives the CDO a high tolerance for ambiguity. Change is their constant. They are hyper-inquisitive -- seekers and synthesizers of ideas, preferably in an "alpha state." That said, every effective CDO carries scars. The learning that took place in the earning of those scars dictates that, having embraced and accepted risk, the CDO will constantly look to reduce risk levels within their digital initiatives. Consistent, disciplined, risk minimization is not antithetical to hubris.
6. A thought-leader:
New ideas fuel the CDO's intellectual and professional engines. CDO's seek out the type of high-fliers who speak at TED events because they identify with them. They follow and respect people like Ray Wang (at Constellation Research) and Scott Galloway (at L2inc). They network naturally and copiously with their peers and they are plugged into the start-up and investor communities. Many are mentors to incubators or innovation labs because digital is driven by disruption and the CDO's radar must continuously scan 360. Richie describes this as: "There's a lot of value to be found on the fringes, out where it can get a bit weird."
7. A time-jumper:
CDO's create the future out of the past. They must be able to move readily and rapidly between the past (constraints of culture and legacy systems) and the future (the limitless world of digital possibility). To succeed, a CDO must be under no illusions about the legacy constraints under which the company operates. The most common constraints are out-dated platforms, but might also be ossified practices, processes, or people. Legacy constraints restrict the boldness of the vision the CDO can present. Pizza Hut, for example, had 9 POS systems at one point in time, so creating an app needing to link to all nine rendered the cost of digital innovation moot. Legacy burdens also impact the CDO's budget and thereby restrict the speed with which the CDO can move. And speed is critical. CDO's seek permission to fail, so long as they do it quickly. They operate on the belief that rapid failure leads to quicker success. Richie describes this as "de-legacy" activity, suggesting that it is more important to "stop or reverse un-innovation anchored on the wrong side of history" than to only look forward.
8. A trust-builder:
The most effective CDO works hard to be seen as an asset to his/her peers. Because a CDO's appointment often indicates that a company feels threatened by digital forces outside its control, a CDO's digital initiatives carry an implicit threat. The CDO must demonstrate by actions and results, as well as by words, that they can be trusted to make their colleagues as well as their customers successful. To that end they must be skilled in the creation of emotional capital, and even more adept at its allocation and cultivation.
The digital corner office: most CDOs we spoke with, do not have a physical office, the digital corner office is completely virtual, or constantly hoteling!