Last month, Harvard Business Review published an article on why we need better managers to deal with Digital Transformation. In their post they mentioned several of the aspects that the digital leadership in your company needs to excel at:
– Creating a transformative vision of how your firm will be different in the digital world.
– Engaging employees in making the vision a reality.
– Channeling an organization’s energy through digital governance.
– Breaking down silos at the leadership level to drive digital transformation together.
We agree with many of the things that are mentioned, but the question is: how do you find this digital leadership?
They mostly seemed to assume that all CxO’s need to work together for this, but not every company is blessed with a digital savvy management team. Without someone really taking charge of something, we all know it usually doesn’t lead to much results, as everyone is very busy with their jobs.
So to take charge of the digital transformation, we believe that you need someone new: a Chief Digital Officer who becomes a permanent part of the team. He or she doesn’t need to be a digital guru, but rather a digital general manager with all the skills to manage a lot of internal and external change. Later on in the post we describe what this CDO should be like, but first you might be wondering whether this role is even needed. What about your existing leadership?
Explaining that makes this a long post, but picking the leader for your Digital Transformation is not a decision that should be made lightly.
Is your CEO up to it?
In the ideal world, your CEO should embody everything that is needed for digital transformation. He or she runs the company and does this from a digital-native perspective, by personally taking up the digital agenda. Unfortunately many companies do not have digital CEO’s yet, so they need to bring in digital leadership in another way.
The first response of the CEO, once he realizes he is not the one to do this yet, is to go look around the existing organization to find senior management that can handle the job. The logical choices would be the Chief Marketing Officer or the Chief Information Officer, but this is not necessarily the best approach.
Can the CMO or CIO lead the digital transformation?
Your CMO understands the real power of digital channels because their department was the lead for most of the online activities that were developed over the last two decades. They own the customer facing touch points of the company which are increasingly becoming digital. The challenge though is that marketers look at the company in a marketing-centric way, without the necessary holistic and transversal view on everything else that matters.
The CIO faces similar problems. He understands technology better than anyone and owns the IT strategy and platforms, but digital transformation has more to do with business than it has with IT. On top of that his responsibilities come with substantial budgets, strict policies and processes, which requires a traditional way of management that is difficult to mix with the attitude that is needed for digital transformation.
More than marketing or technology
Now we know that the transformation ahead is not (just) about marketing or technology. It involves everyone and everything in the company and is triggered not by technology, but how a changing society is utilizing technology.
It is correct to assume that both the CMO and CIO will be at the frontline of the digital events, but they might not be suited to draft the marching orders for the entire company, if they are held back by their vertical legacy and day-to-day focus. Maybe your CMO or CIO has broader management skills, and a transversal view of the company. If that is indeed the case, they could be the person to shape the digital transformation, but then they would have to leave their current job to take up the new position of leading the transformation. We believe it will be difficult to combine the role of the traditional manager with the role of the great transformer, as these have inherent conflicting strategy and tactics.
A Digital Transformation Officer?
Digital Transformation is not an event that you can just temporarily hire people for, then once the job is done, they leave the company to pursue other crisis management challenges. Digital transformation is a permanent process. It will never stop. Once you digest one wave of disruption through the proper transformation, you will face another one. This new senior person will stay on board for a long time and must be part of the core. Someone with a special mandate for a limited period of time will not succeed.
Another problem with this view is that, although the DTO reports directly to the CEO, he will be perceived as some kind of (external) consultant. The chances of really blending in with the rest of the team will be slim. The DTO might be regarded as an intruder, not a peer or a partner of the other CxO’s in the company.
We need a Chief Digital Officer
The Chief Digital Officer is someone new on CxO level that will be there for the long run. The main reason you need a CDO is because your current CEO is not digital enough to run the company as if it was Uber, Airbnb or Tesla. This possibly creates an awkward situation and perhaps even tensions between the CEO and the CDO that need to be resolved. There has to be a strong partnership between the two or the operation will fail. So what does this CDO look like?
Your CDO needs the following capabilities:
– Leadership and charisma to align all stakeholders to make the transformation happen.
– Breaking down the traditional silos to create a transversal company with new hybrid structures.
– Understanding and managing the internal politics and speaking the languages of IT, marketing, strategy and finance.
– A challenger of everything that is already in place on a strategic, operational and process level.
– A thorough digital knowledge in: e-commerce, transactions, marketing, social media, mobile, data.
So what about the CEO?
When you read all of the above, you might realize that a lot of the general characteristics of the CDO are actually the same as what we would normally expect from a CEO. The only way to make this happen is for the CEO and CDO to have a very tight cooperation, a real trusting partnership, in which the one is strengthening the other and vice versa. The CEO stands for the power of the present (and the past), the CDO stands for the opportunities of tomorrow. You could call it a form of co-CEO-ship, although that is often known to not be a very effective leadership model.
The CEO needs a CDO when he is unable to pull off the huge challenge of digital transformation alone. By accepting a full-force CDO and giving a “license to change”, the CEO knows that a lot of the future of the company will depend on the success of the new kid on the block. This could mean that the CDO is involved in creating and rolling out the initiatives that guarantee the revenue streams and profit of tomorrow. This will make the CDO the executive holding the keys to the future, putting him or her in direct line to become the next CEO of the company.
Of course the CDO cannot make all of the changes alone. Like any other division, he or she will need a team to get things done. More about this in a future blogpost. In the mean time we are very curious to hear your take on this. Who do you think should lead the digital transformation?
If you already want to read more about this now, check out our book on Digital Transformation, in which we devoted chapter 4 to ‘Changing your company‘.