A New Management Innovation – the Chief Digital Officer

Global business is currently undergoing one of the most significant changes seen in the last thirty years. What commenced as a computer hardware revolution in the 1980s has now given way to a software revolution that is impacting every organisation, a revolution which is accelerating at such a rate that many businesses are having difficulty keeping pace.

The significance of this technology advance is principally two-fold: it is fundamentally changing the relationship between people and business, economic and political structures, and it is also changing established corporate paradigms.

In the business arena software is having a much greater influence on the corporate agenda. In the past, the IT department (in conjunction with hardware vendors) largely controlled this agenda, but in the developing digital era, it is the users who are dictating what software they want, how they want it to work and on what devices they want to experience it. Developers are bringing their products to market with the tacit understanding that further improvements and modifications may need to be made in order to have them fully functional. Increasingly users are accepting this practise, resulting in software coming onto the market much more rapidly than historically has been the case. With management more readily allowing employees to use their own personal devices in the workplace (smartphones, laptops, tablets etc) the IT department is no longer holds all the cards.

Does this mean that corporate technology has become something of a free-for-all and that IT departments are becoming redundant? Not at all. Even though the use of personal devices in the workplace is on the increase, corporate technology is not the same as personal technology. With developments such as unified communications technology, wireless networks, the cloud and big data for example, there are important issues to be addressed in relation to connectivity, security, data integrity and prevention of data loss. Indeed, this new technology revolution is creating a potentially greater level of complexity, not less.

Product and process innovations are not the main bottleneck

In relation to corporate progress, product and process innovations are not the main bottleneck. The principal bottleneck is management innovation. What this technological change is bringing about is the need for a different set of skills within the IT department. Chief Information Officers (CIOs) must develop a more holistic approach to the organisation’s requirements (rather than concentrating specifically on technology management) and apply creative technology solutions that will optimise critical competitive business processes and provide relevant user experiences.

Delivering an outstanding customer experience (both internally and externally) has become a strategic imperative. To achieve this requires a closer collaboration between the IT leaders in a business and those of customer-facing areas. Yet for many organisations, there remains a lack of confidence in, and sense of dissonance from the IT department. With the pace of technology change, it would seem that too much is still being left to chance causing frustration across many departments as they address the challenges and opportunities presented in the new digital environment.

Inasmuch as there is a definite need for change within the IT department, digitizing the entire enterprise requires a skill set that lies well beyond IT. The challenge of capturing the full value that social technologies will provide requires businesses to adopt innovative management practises that will transform their organisational structures, processes and even their cultures to become “extended networked enterprises” that connect well internally, and equally well externally with customers and stakeholders. Additionally, the demands of a digital world require organisations to be both growth oriented and cost conscious at the same time.

Achieving these critical objectives requires someone whose skills incorporate a customer-centric focus, significant business and team management experience, consummate change leadership skills and a deep understanding of social technologies. These skills are neither going to come from the IT department, nor necessarily directly from marketing or sales. It needs someone whose skills potentially come from all three, plus others. In response, management innovation is being achieved by a growing number of CEOs who have created a new position at the executive table. Today, there is a chair exclusively for the Chief Digital Officer.

Senior executives champion for the CDO

The concept of a Chief Digital Officer is gaining in importance as organisations begin to recognise the full impact of a robust, dynamic flow of data, knowledge and information across business interests and through social activity streams. Many senior executives are also championing the position of Chief Digital Officer because they see the CDO as someone who can bring the whole of the organisation’s digital footprint under one roof and provide purposeful interface between the IT department and customer-facing divisions. As an agent of change, the Chief Digital Officer will be expected to ensure there is total clarity and consistency right across the enterprise in how the organisation transforms into the digital age.

The explosion of social media networks has created major opportunities for companies and staff alike, with employees in key positions often encouraged by management to flourish as thought leaders and entrepreneurs by developing their professional networks. However, as corporate digital technology rapidly evolves to encompass marketing, sales, public relations and customer services channels, alongside recruitment, procurement and R&D, senior executives are beginning to realise that tighter control of their company’s digital footprint is imperative.

In the digital era, the focus of competitive advantage is turning to the competence, integrity and the attractiveness of a company in the battle for stakeholder trust and the sustainability of customer loyalty. As it is the organisation’s digital footprint that is increasingly influencing the value of its reputation capital, CEOs are no longer willing to leave control of it to the heads of the departments using the social media networks. This is the remit of the Chief Digital Officer.

A challenge to the boardroom

In addition to the CDO needing to be both a highly practical and accomplished businessperson and a visionary, he or she also needs to have two other key attributes: creativity and agility. According to Laura Wade-Gery, Executive Director Multi-channel E-commerce at Marks & Spencer, the UK-based multinational retailer, digital enables companies to do something they could not achieve before. “One of the challenges is how to get the organisation to be much more digitally and tech-savvy, and how to get the boardroom to really understand the power of what’s going on and to be sufficiently digitally literate. It is straightforward to use digital channels to do what you used to do in an analogue way. However, real sophistication and adoption means you change what you actually do.” Today’s consumers can easily identify, and are quickly turned off by, off-the-shelf experiences and automated solutions. The CDO needs to be skilled at delivering real creativity; experiences that will “connect” with end-users and retain them as valuable customers.

Given that the number of consumer touch-points has increased significantly even over the last five years, the CDO will be expected to be agile on all fronts, particularly technology, infrastructure and content. Mobile platforms are evolving very quickly and are beginning to play an important role in how companies communicate with their customers and their own people. Not only must the CDO be capable of overseeing a smooth transition of new technologies across all departments, he or she will also need to be very adroit at ensuring the business model can adapt rapidly to the “next big development”.

To achieve competitive advantage in this new era of opportunity, an innovative and dynamic approach to digital business – one that requires speed and flexibility to create the most value – is required. Power and influence will shift largely to those companies with the best reputations and trust networks. Such is the growing importance of the Chief Digital Officer that Gartner, the global information technology research and advisory company, predicts that by 2015, 25 percent of organisations will have a CDO in the C-Suite. The challenge for CEOs is that they need to act with some degree of urgency because there is already a shortage of good people with the right skills, experience and competencies, even on a global level, who can fill the role of Chief Digital Officer.

By David Dumeresque

About the Author

David Dumeresque is a partner in London-based global executive search consultants Tyzack Partners. He has over twenty-five years of experience as an advisor to a number of organisations including large multinationals to small owner-managed businesses. After five years practice in London and Paris with solicitors Slaughter and May, David spent some ten years in investment banking with NatWest Investment Bank, Scimgeour Vickers and Citicorp Investment Bank. He moved into executive search with Tyzack in 1991.
A qualified solicitor, David is a graduate of the University of Durham and is a member of the Harvard Business Review Advisory Council.

Photo: Technology in the hands of businessmen from shutterstock.com

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