Just over a year ago, Gartner predicted that by 2015, 25% of organisations would have a chief digital officer (CDO). Since that Gartner forecast, notable progress has been made, with the successive launches of a CDO magazine, a CDO club, summit and leadership council. And indeed, the appointments of CDOs across the world in businesses such as Gannett Inc, Starbucks, McDonald’s and L’Oréal have followed suit.
Why have a CDO?
As even a cursory scan of the blogosphere on the subject of CDOs reveals there is a degree of anxiety about this new role, in both technical and marketing circles. Why, some commentators question, have a CDO in the first place, when the effective collaboration between the chief information officer (CIO) and the chief marketing officer (CMO) would likely produce the same benefits for the organisation?
Driving change
While Françoise Lamotte’s experience in this space has been a personal journey, it illustrates perfectly a fundamental reason why organisations bring a CDO on board: driving change. Back in 2007, when she was with Axa, Lamotte was appointed to the newly created role of chief digital business officer. Social media was in its infancy in Europe at that point, and the phrase used then was, as many readers will remember, Web 2.0.
The insurance giant wanted to drive a cultural transformation to take advantage of the opportunities provided by new technologies and go beyond its ‘business as usual’ performance. “It was felt that having a person to embody the transformation, with the right level of authority and the appropriate reporting line, was the way to go,” commented Lamotte. Interestingly, Axa had both a marketing head and a CIO but neither was asked, in this case, to take on the digital mantle.
Bringing in a third person in the shape of a CDO can help reframe the dynamics to great effect and accelerate the transformation effort of the organisation. But it is not without its difficulties. Tasked with the objective of reconciling the technical domain (aka IT) and the customer domain (aka marketing) to deliver competitive advantage, the CDO sits, typically and perhaps uncomfortably, between the CIO and the CMO.
For David Smith, this ‘collision of roles’ is often triggered by the organisation deciding to have a review of its social media presence. “If the delineation between CIO and CMO is fuzzy, especially around market communications and data protection, you could rapidly end up with internal conflict as well as adverse reputational impact,” he says.
Crystallising the meaning of ‘digital’
For Vicky Muronen, a CDO in post also helps to crystallise what the organisation means by ‘digital’. “At the simplest level, bringing in a CDO forces the business to agree a definition of what it means by the word digital. This can then be communicated to everyone to provide focus and direction,” she explains.
What do successful CDOs do?
As leaders know, a successful transformation is both art and science. So, with the CDO role being overtly about change, there is a ‘magic sauce’ available that can help newly appointed CDOs. According to our panel, the ‘sauce’ has three ingredients: 'First, you need to establish a vision for what the business will look like,' underlines Lamotte, 'not just for employees and the board but also for partners, such as tied agents in the insurance sector.'
The next task is to drive the change and make it real. 'Get some incubators and pilots going – the important thing is to make people experience change,' she adds. Muronen picks up on the theme: 'As you get these pilots under way, you start to bring the organisation along on the journey with you – the third component of success. The whole thing becomes self-propelling.'
Look for early wins
Similar to other change programmes, early wins are undeniably a good thing to get under your belt. Look for where the gaps are and publicise both the priorities tackled and the progress achieved, is the advice coming from Smith and Lamotte. 'I used to – and still do – identify three things that could be made better in a short period of time,' says Smith.
'We had a weak search engine optimisation (SEO),' recalls Lamotte, 'so we created a group centre of expertise quickly. I also consolidated our various domain name suppliers into one provider to save cost.' Once value is demonstrated, whether measured in quality, money or time-to-market, the case for resources is easier to make, channelling additional investment to the CDO and their team.
Collaboration is essential
Whatever the context, collaboration across the three functional areas of marketing, IT and digital is critical to success. And so is clarity on what each team is there to do.
Going back to the question of customer data raised by Smith, Muronen believes CDOs, where they exist, are perfectly placed to become accountable for the delicate balance between data risk and opportunity. 'The customer of any organisation must feel their data is secure, but that should not be an excuse to thwart the launch of online services – new digital offerings and revenues can be created.'
Given her current role in Aviva, Lamotte also points out that privacy regulation has become more rigid and more complex. France and Germany champion strict rules. With different regimes in place in each European country, the injection of a commercial mindset in what is traditionally the realm of IT becomes all-important.
In addition to new service development, the continuous rise of social media is another obvious focus area for the CDO. Smith has come across situations where the IT team had enabled the organisation with social media tools, but without much (or any) training, guidelines and control. 'In the absence of a CDO, the worst possible configuration of this scenario is when the IT team has activated a social channel for the sales and marketing team, with both sides assuming that the other is picking up the ball thereafter.'
In such a context, nothing should slip through the net – engagement by marketing is a must – even if there is a CDO on the scene. Longer term, for the transformation to be sustained, our panel agrees that once a new digital approach to running a part of the business – such as customer acquisition campaign or product launch – has been nurtured centrally, it is important to devolve it to the business units.
Few companies have remained in the era of centralised empire-building: as soon as possible, the activity should be taken over and embedded by the local teams. This usefully frees up the digital transformation team to move on its next priorities, be that reshaping the website or the mobile data strategy, without the burden of operational delivery.
Should the CDO own a P&L?
The panel has an open view on this. Lamotte is quick to summarise both sides of the argument. While making the CDO a P&L-carrying executive has its attraction – if only for the kudos it brings and the equality of status with business unit leaders – there are so many targets which can be attached to the role that no single P&L boundary can accommodate them all.
Because it is about transformation first and foremost, successful CDOs create a cross-functional coalition which advances the digital agenda.
And when it comes to the specific components of the CDO role, your network has to be broad and deep. Both Muronen and Lamotte use data regulation as a prime example of the orchestrator competence required: 'For sure, you’ll want the legal team at the table.' Muronen says. 'Your channel mix is changing – get the distribution team to join in,' Lamotte adds, 'and because it is fundamentally about needing new profiles and new talents, you need HR in the tent as well.'
For success then, think alignment rather than power base.
When should you create a CDO Role?
Digital has been centre stage in IT sector organisations since at least 2005 and, as we have seen, in insurance businesses since 2007. So if it is so important, why is it taking so long for the notion of the CDO to take hold widely?
If you are not thinking about it by now, it is getting late according to our experts. For Smith, 'the early adopters of CDOs have done it quite well'. This gives an opportunity for others to pick up the lessons learned and accelerate their plan to bring a CDO in.
The wrong approach, emphasises Lamotte, is to wait for some tipping point to be reached, such as the percentage of an organisation’s revenue generated online to exceed 10 or 20%. 'For B2C, it’s too late – when I look at consumer behaviour and content consumption studies, digital is a reality now.' It does not necessarily follow that a CDO is required as an individual with a team, but there needs to be clear ownership of the digital agenda.
Smith reinforces this view with a note of warning: 'Some companies still have no one on point to manage the confluence of information – digital, social and mobile – and such a gap can lead to reputational damage in the blink of an eye.' Muronen concurs but has observed a noticeable rise in the maturity of the discussions on data and its digital use. 'It is now something that gets raised very regularly at board level in both the private and public sectors in various guises – it can be under the topic of privacy as much as the protection of intellectual property rights.'
And because the issue is now very visible and regularly reviewed, the panel suggests that the CDO role may not need to sit on the board of the organisation.
It is particularly important for global organisations
While B2B companies can just about wait a little longer to embrace and manage their digital agenda, time is frankly running out. Global organisations face an additional dynamic: local market units spotting a digital opportunity and moving fast enough to grab it.
In the absence of a company-wide framework for digital deployment, there is room for fragmentation and customer confusion. Smith explains: 'Because their market dictated it, I’ve seen the US country team of an Asian service business act quickly to launch a Twitter feed. Followers assumed this was a global channel when in fact it was a US-only product-centric tool, which became contradictory to the messaging coming from the global HQ.”
Both enthusiastic home-grown projects and the competition can get in the way of an otherwise well thought-out digital strategy.
Where do CDOs come from?
Who could be CDO is a question that has raised interest in the marketing community, suspecting that the role would be filled by techies who really ‘get’ digital. Unsurprisingly, on the other side, not a few CIOs have been muttering that the job would naturally fit CMOs. Marketers, after all, tend to understand the market and the customer base well and can be more practised, it is said, at their own internal promotion.
In Smith’s experience, becoming CDO can certainly be an evolution of the CIO or the chief technology officer (CTO) role. The entry point tends to be the digital manipulation of data. 'A real question CIOs who want to transition to CDO have to ask themselves,' he says, 'is how they are going to find personal headroom in the day-to-day running of the IT infrastructure to beef up their commercial and data expertise.' Just being good at keeping the lights on is not going to cut it.
For Lamotte, framing the principal purpose of CDOs as change champions is a good short cut to get to the heart of the prerequisite skills that every organisation must look for when selecting someone for the role.
When the group CEO of Axa decided to allocate the local CDO’s responsibility to one person in each country unit, the choice was left to each country manager to find the right person in order to support, localise and amplify Lamotte’s efforts. 'People came from a mix of backgrounds – some were marketers with a strong appetite for technology, others were from the tech side, still others came from diverse functions. But they all had something in common: business leadership. And this is a quality I continue to look for today,' she emphasises.
The ideal CDO profile
The panel agreed the following outline picture of a CDO: 'It’s a mosaic profile – an all-rounder with solid influencing skills, deep curiosity about the technology and passion for the markets in which the business operates.' Smith adds: 'The CDO is someone who personally embraces and experiments with the digital tools available, but the answer is not a geek surrounded by other geeks.'
For the panel, it is clear that marketers do not need to feel threatened by the rise of the CDO as long as they evolve and blend these new skills with their current strengths.
Where does the CDO go next?
Because they continuously anticipate the future of technology, our panel could not finish the discussion without thinking about the future of the CDO role itself. 'I’m not even sure this is a permanent role,” Lamotte says. “In five years’ time, the function should be so much part of the fabric of any business that you do not need a person to be the digital champion. This is how I am driving my team today.'
And in five years’ time, some new transformation wave will likely appear on the corporate horizon. After the internet, Web 2.0, cloud and big data – to mention just a few of the buzzwords of the past 10 years – change will continue to be with us.
Leadership, transformation management and curiosity are certain to be skills in high demand – regardless of the label affixed by the corporate experts of the time.
Participants in the discussion were: Françoise Lamotte, marketing and communication director of Aviva France; Vicky Muronen, head of corporate information and security at FCO Services; Vincent Rousselet, former CEO and Fellow of the Strategic Planning Society; David Smith, Fellow of the Institute of Directors and of the British Computer Society and interim CIO executive
This article was taken from the March 2014 issue of Market Leader. Browse the archive here.
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