If your business is reaching a relatively mature stage of digital competence, should you now be looking for someone at executive level to manage its digital transformation?
Pierre Peladeau, Mathias Herzog and Olaf Acker, writing for Strategy+Business, examine the trend for hiring strong digital leaders and summarise the challenges they face.
Studies show an increase in the number of executives with responsibility for implementing the digital ambitions of large public companies. These are referred to as chief digital officers (CDOs) by the authors, although actual job titles vary. Often members of the organisation’s C-suite, some CDOs may be as high-ranking as director or vice-president.
CDOs are more likely to be found in larger businesses, and particularly in consumer-focused sectors like communications, media and entertainment, food and beverage, and transportation and travel. More recently, insurance and banking companies have joined these sectors, seeking to improve their customer interaction while also benefiting from greater digitisation of their operations internally.
The percentage of CDOs with experience in technology is rising, while those from a marketing, sales or customer service background – who previously dominated in digital leader roles – are decreasing in proportion. This shift is particularly evident in the C-suite. The tendency toward one or other of these options relates to companies’ differing needs.
Whatever your circumstances, choose a CDO with the ability to overcome key obstacles, such as:
- Ad hoc digital initiatives – varying throughout the company and without central oversight;
- Change-resistant traditional cultures;
- Barrier-forming talent gaps; and
- Inefficient and distracting legacy systems and structures.
Here’s what the new class of digital leaders and their organisations must do to tackle those issues.
1) Unify the digital agenda. As well as drawing the disparate areas of existing digital activity into a coherent strategy, the CDO needs to win the buy-in of all concerned. François Gonczi, CDO of French utility firm EDF, owes much of his success in aligning people with the digital agenda to the political skills he gained previously through a role in liaising with the EU.
Thomas Gewecke, CDO and executive vice-president for strategy and business development at entertainment giant Warner Bros, is another success story. While digital technology had long been used separately by the company’s various divisions, Gewecke was specifically tasked to enhance results and efficiency through consolidation and cooperation.
2) Bridge the talent gap
To deliver on your digital ambitions, you need to find or develop people with the right knowledge and skills. In the authors’ study, one sign of the talent gap is that 46% of CDOs have been recruited from outside rather than home grown. And it is not only the CDO who needs to be skilled. “We are all digital,” says Thomas Gewecke of Warner Bros. By implication, training and development is needed in every part of your organisation.
Todd Walthall, senior vice-president of customer experience at US healthcare provider Blue Shield, stresses the need for blending digital talent with specialist knowledge of the industry concerned. In his complex business, digital expertise would be of little use without an understanding of the sector and how it is structured.
3) Confront legacy structures. Your CDO must be able to take your digital development forward while continuing to work with existing back office systems and related organisation structures. These cannot always be simply replaced and if you handle them the wrong way they may bog down your plans for transformation.
Yves Tyrode, while CDO of SNCF, France’s national railway company, found great difficulty in simultaneously managing the day-to-day operation of legacy IT systems and pushing forward on digital development. Taking up a new CDO post at French bank BPCE, he requested a different arrangement. He would be responsible for the ‘fast IT’ programme but the legacy ‘core IT’ would remain the responsibility of the chief information officer (CIO).
François Gonczi at EDF sees the old style of building and managing IT systems as a block to innovation. To minimise risk, each application tends to have its own set-up, run by its own specialists. The result is an aversion to rapid change, which is seen as risky. In his view, digitisation should be approached holistically, with greater transparency and more seamless links between applications.
Another view comes from Todd Walthall of Blue Shield. When he arrived at the company, member recruitment was growing so rapidly that its existing manual processes could not cope. An incremental solution was not possible, so Blue Shield set about migrating members to a new and faster system. An important factor in achieving this was the company’s strong collaborative relationship with its CIO.
FIND THE RIGHT DIGITAL LEADER
Regardless of abilities and experience, your CDO must have a high enough position in your organisation and its governance to exercise the authority necessary to bring about change.
The skillset required will vary between companies, industries and stages of development, and may well alter with the evolution of new and more sophisticated technology. A true digital leader should be able to steer your organisation through change while maintaining an overall strategic awareness. If you are to find that person, you must first understand where you are on your digital journey and where you want to go.