Now that business is digital at its core, it's time to buddy up with the CDO and CMO.
Still not convinced? Here's what George Westerman, a researcher at the MIT Center for Digital Excellence, had to say about the companies that his research has found to be "digital masters." For them, "technology is not technology. It's an opportunity to rethink the processes of how they do business."
He discussed his team's research during a panel session on business transformation at last month's MIT Sloan CIO Symposium in Boston. "Digital masters all have a common approach to managing digital and are 26% more profitable than their peers," he said. "They lead differently. For all the talk we've seen [advising us to] 'let innovation happen around your organization,' these leaders drive transformation from the top down."
Westerman and his research partners identify companies as digital masters if they meet the following two criteria:
- They invest in technology with the viewpoint that it represents an opportunity to transform their business, and they have leaders who are proactive about finding ways to use digital technology to benefit all aspects of the business.
- They drive technology innovation across all business departments, marrying a clear digital vision with a strong governance foundation, preparing the company to change, and seeing that change through.
He gave some examples in a prepared statement, citing Nike, Caesar's Entertainment, and Chilean mining company Codelco as digital masters:
[Nike] is end-to-end digital, from supply chain to design and marketing. It combines custom-designed social media with a digital supply chain. By creating its Nike Digital Sport group, Nike linked all of these functions together, and the company is able to launch more products, customize products, test new designs, and customize advertising to a highly personal level. Within a Caesar's venue, customers are supplied with a concierge on their personal phones that immediately responds to any need, perceived or actual. And the largest copper company in the world, Codelco, is using digital technology both to track production in its copper mines and to update customers about orders. Digital technology also allows Codelco to use driverless mining trucks, and it may even help increase production while minimizing the volume of human activity underground and corresponding safety concerns.
According to a report released earlier this year by Forrester Research, the "biggest test on the road to becoming a digital business is convincing senior management that it's worth the effort. Only one in six of the 1,254 global business execs surveyed by Forrester said his or her company has the competencies to execute a digital strategy.
Indeed, as he noted during the MIT CIO Symposium, "If you think of your organization as a caterpillar, then digital should turn you into a butterfly." The problem, he said, is that many of the businesses his group has studied "are using digital to turn themselves into really fast caterpillars."
What does all this mean for CIOs? For one thing, it's time to make two important new friends in the business: the chief digital officer and the chief marketing officer.
If you're the CIO of a company with a CDO, invite that person out to lunch as soon as you're done reading this (assuming that you're not already lunch buddies). If your company doesn't have someone in the CDO role, do all you can to lead the digital charge before it appoints someone else. Tanya Cordrey, CDO for London-based Guardian News & Media, participated in the CIO Symposium session with Westerman. She said her role on the executive team is meant to be "that little bit of grit in the oyster to make sure we never lose our emphasis on moving forward."
According to Cordrey:
Our approach to digital transformation was dropping a pebble in a pond, and that pebble was the formation of my team. We are building a world-class digital team that would not look out of place at Google or in Silicon Valley. Building out those disciplines was a very clear signal to the rest of the organization that we were going to move forward, and that we had a critical mass of people who were going to drive that transformation forward. Everybody who works at the Guardian has to be digital.
F. Thaddeus Arroyo, CIO of AT&T Services, who also spoke during the session, got out ahead of the CDO trend. The corporate-wide CDO at AT&T Services reports to him. If your CDO reports directly to the CEO, it's even more critical that you become allies.
Outside of IT, the most digital savvy part of your organization is likely your marketing department. Its members have been working on customer-facing digital initiatives for years, either with or without the CIO's involvement.
Advising CIOs to befriend the CMO isn’t a new concept, but it's easier said than done. Plenty of cultural barriers remain. The two organizations are still jostling for technology budgets.
Arroyo takes a different approach to the budget conundrum. "I like to look at every budget as a digital budget," he said. "As you're using digital technologies to enhance the top line, you can afford to drive incremental investment. As you make those cases, and you're facing disruption in your industry, many of your technology budgets will continue to grow as long as you can prove business value."
Added Westerman: "The great CIOs are not only about spending IT money well. They're good at helping the business spend money well. The better you get at managing technology, the more appetite the organization has for spending on technology, because they see the results."
Originally posted on InformationWeek by Susan Nunziata on June 5, 2014.