[Thoughts] The OCD of CDOs

Two pieces of informations came to bug me recently.

On the one hand, Innosight’s executive briefing on strategic readiness and disruptive change stating:

  • Fully 85% of respondents say their organizations need to transform in response to disruptive change
  • yet only 49% say that feel very confident or confident that their organizations are prepared for transformation in 3 to 5 years.
  • That number drops to 42% in a time frame of 5 to 10 years.
  • Only 12% of organizations have a formal growth strategy with at least a 5+ year time horizon.
  • The remaining 88% either have no formal growth strategy or it is shorter term.

One the other hand, the rise of the Chief Digital Officer …:

  • 25% of companies will have a CDO by 2015 as reported by Gartner in 2012
  • the number of Chief Digital Officers in 2013 doubled again in one year—to a total of 500. And the CDO Club is conservatively projecting that number to double again, to some 1,000 Chief Digital Officers by the end of 2014.

As if the answer to the increasing need for lasting transformation is to be addressed by this new created role of the Chief Digital Officer.

Now when you look a CDO Club figures, CDOs were predominantly represented in the following industries/categories

  • advertising sector, at 36%
  • media at 18%,
  • publishing (13%), nonprofits and municipal (10%),
  • and financial (8%).

68% of them are in the US, 23% in Europe (mainly United Kingdom, France, Spain, Italy and Germany).

Now that bother’s me. So I tried to understand what CDO means and what is their remit, given the 3rd industrial revolution that is taking place is impacting many parts of the organisations value chain, not just Marketing and communications.

Russel Reynolds, the executive leadership and search firm explains that “traditionally, digital was positioned as part of the marketing function within the business, responsible for driving the organization’s online presence. The last two years have seen the rise of the Chief Digital Officer, a senior executive who sits at the right hand of the CEO and is seen as instrumental to the future of the organization.” Gasp!

Understandably “For many companies, especially those in the retail and leisure sectors, digital is the fastest- growing revenue stream, and a Chief Digital Officer (or, sometimes, SVP Online) is extremely important in driving that growth”. But according to Russel Reynolds, CDOs will “be the executives with the operating experience, management skills, strategic mindset and vision to lead businesses in an increasingly technological future.” (…) and the role will “require change management capabilities that can impact the whole company” (also they mention this specifically for traditional media industry).

Although I understand the need for companies to realign their business models, and processes to address their customers. But Digital Transformation goes beyond MarComms function.
In his post about the 2014 State of Digital Transformation, @BrianSolis form Altimeter group makes an interesting point:

  • investing in digital technologies does in of itself not equate to digital transformation
  • digital transformation has become yet another victim of the technology first efforts that miss the human mark, i.e. how people in organisation use tools and techniques to get the job done
  • true implication of digital transformation spans beyond technology on the real of infrastructure, organisation and leadership – across “everything from HR to collaboration to sales to supply management and beyond”.

Erik Brynjolfsson – director of the MIT Center for Digital Business and a research associate at the National Bureau of Economic Research (see the video in footnotes), explains that 120 years ago, when American factories began to electrify their operations: productivity did not increase in those factories for 30 years. “That’s long enough for a generation of managers to retire.

the first wave of managers simply replaced their steam engines with electric motors, but they didn’t redesign the factories to take advantage of electricity’s flexibility.It fell to the next generation to invent new work processes, and then productivity soared, often doubling or even tripling in those factories.”

and just as the earlier generations of managers needed to redesign their factories, we’re going to need to reinvent our organizations and even our whole economic system.
He’s TED Talk explains brilliantly the cascading effects of technology, and the specifics of what he calls the machine age, i.e.the revolution supported by machine computation (see my previous post: “I don’t believe in Digital”): replicable at no cost, exponential and combinatory.

SO even though CDOs might be useful, for some companies and businesses – as is, i.e. eCommerce and Marcomms roles to engage with digital customers at every touchpoint of their journey, I doubt the creation of the role alone will be sufficient for organisation to understand and act upon how they need to transform and survive in the long term.

When the Wise Man Points at the Moon the Fool Looks at the Wise Man’s Finger

 

Digital MarComms, Social Media, technologies are the finger. They distract us from understanding the profoundness of the disruption taking place.

As Gary Hamel states in his HBR article:

Until we challenge our foundational beliefs, we won’t be able to build organizations that are substantially more capable than the ones we have today.

That’s all folks!

Sources:

Innosight:  The Strategy Confidence GapResults From Our Survey on Strategic Readiness and Disruptive Change
Gartner: Every Budget is Becoming an IT Budget
CDO Club: Number of Chief Digital Officers Doubled in 2013
Russel Reynolds Associates: The rise of the Chief Digital Officer
Altimeter Group:  2014 State of Digital Transformation
Erik Brynjolfsson: The key to growth? Race with the machines
Gary Hamel:  The Core Incompetencies of the Corporation