The end of the Chief Digital Officer, or just the end of the beginning?
Thu 22 Jun 2017 | Matthew Smith
Matthew Smith, Global Head of Market Development, Internet of Things at Cisco Systems, discusses the role of the Chief Digital Officer and its evolving responsibilities…
It was probably around 2013 when the business world rapidly woke up to the concept of digital across disparate industrial applications and not just being a function of e-commerce. The Internet of Things, which had been around since the 90’s in the form of RFID was suddenly, through rapidly accelerating digital connectivity, transformed into the art of the possible.
Wikipedia, that font of all knowledge, even in those days, described the Chief Digital Officer (CDO) as an individual who helps a company, government organisation or city drive growth by converting traditional analogue business to digital ones.
Companies rushed to hire CDOs, in many cases not sure what or who they were hiring. Many of these CDOs were initially marketing focused, looking at the world of digital through a marketing lens. The focus was on social media and how to position their organisations more effectively from an external view, rather than focusing on the internal possibilities of a digital organisation.
A report authored by Peter Hughes of Deloitte opined that “CDOs will hit a peak, after which the role will start to become redundant and will in fact completely disappear by 2020, as corporate strategy”. While the underlying theme of this report is that organisations will have fully transformed to digital by this point and where Hughes states “For many industries, digital will become so infused with the business that it will make no more sense to have a separate leader and separate team than it does now to have a Chief Email Officer.” This may in fact, not be the case.
Digital change will be exponential, and designing strategies to address it will be a full-time occupation
Managing disruptive advances
One of the greatest challenges for the CDO of the future will be linking disparate silos within an organisation and translating them externally into a 360-degree view of both primary and secondary customers to extract value. This is a challenge that needs to be driven and driven hard and is not something in the remit of a CEO to be spending 100% of her/his time on.
To think of an organisation as ever being digitally transformed is also a very unlikely scenario. When I joined Cisco 17 years ago, there was no real wireless internet adoption, look how the world has changed since then. It may be a good parallel to look at technology like we look at televisions, every year they get better and cheaper and bring new features.
With these rapid changes in technologies and their ever growing e-outcomes, organisations need to view digital transformation as a continually moving target. Whether internally or externally sourced, CEOs and their boards will need to attract talented executives who, regardless of job title, understand the potential impact of digital disruption.
When you simply look at connectivity of devices, 2008 saw the number of connected devices equal the number of people on the planet. This number went through 18 billion eight years later and looks to triple in the next four years. Imagine all the outcomes you have seen as a result of technology in the last eight years, tripling and happening in half the time. Digital change will be exponential, and designing strategies to address it will be a full-time occupation.
One only needs to look at things like the rise of ‘bots’ in customer service, and the implications for Artificial Intelligence across an organisation. In five years’ time, your manager (even if you think they are one today) may be an actual ‘bot’! All of these foreseeable advances, combined with the unforeseeable ones means that the need for a CDO is greater than ever before.
To quote Garter “in digital change, action leads often to an exponential growth in reactions. Disruptions cause ripples of change to radiate out and to change other areas. As we see an increase in disruptions, we will see a corresponding increase on secondary effects.” This is obvious in many areas, but it will be the not so obvious adjacencies that have the potential to drive previously un-mined value.
The CDO will ultimately need to be the function that identifies value in adjacencies
One example of this may be infrastructure financing. Car parks, particularly hospital car parks always used to be a sound bet to hold in your portfolio. This may not be the future case. Apollo Hospitals, which owns 64 hospitals in India are trying to drive people away from hospitals initially to clinics, but ultimately to the home and then the mobile device. The future for infrastructure may be in finding multiple digital revenue streams from what were once regarded as single function monopolistic assets driving mundane returns.
These digital adjacencies, or as they are known, secondary effects, will drive much of the future value in this changing economy, and they should be ignored at your peril. The CDO will ultimately need to be the function that identifies value in these adjacencies and doesn’t seed it all to disruptive third parties. In 2003 when Harvard Business Review talked about ‘Growth Outside the Core’ and the value of adjacencies, they could not have imagined how that would be re-written for the coming decade of digital adjacencies.
The partnership between the CDO, CTO and CIO also needs to be stronger than ever before. The strategy, architecture and deployment teams need to have seamless hand-offs and organisations that get this right, and manage to communicate the vision and bring employees and customers along with it, have the opportunity to deliver exponential results in comparison to their peers that do not manage this.
I truly believe that the future for the CDO is bright and exciting, and as collaborator in chief, it will be filled with great communicators, possessing strong business acumen and a passion for the changing technologies of the world.