the emergence of digital and the chief digital officer
TRANSCRIPT
Why is Digital Transformation important? Interesting insight
• Of the 7bn global population, 2.4bn are internet users and 1.9bn are active social media users
• 1.5bn people have mobile internet connectivity and use it, on average, for 2.1hrs per day
• Social network users will rise to 2.2bn by 2015
• UK online retail sales will grow by 10% a year to reach a total of £54.7bn in 2017
• Mobile penetration is over 90% everywhere outside of Africa, topping out at 129% in Western Europe
What are industry commentators saying? • Gartner recently surveyed 2,339 CIOs across 77 countries and
found that 51 percent are concerned that emergence of digital is coming faster than they can cope with and 42 percent don't feel that they have the talent needed to face this challenge
• MIT Sloan Management Review and Capgemini Consulting took a different approach and surveyed a broader selection of executives. Of the 1,559 surveyed, 78% believe that successful digital transformation is critical to their business over the next two years but only 20% felt their business is doing enough to drive it
• The same survey argued that organisations must succeed in digital transformation, as failure to do so will lead to destruction at the hands of their competitors that do
• Booz & Co’s recent report on digitization outlined their view that, in the digital age, any organisation wishing to be a leader in its field, and/or facing complex cross-boundary challenges, will need to hire a CDO to help protect it's future success
• MIT Professor Andrew McAfee has stated, “I can’t think of any industry sector or company which is immune from digital transformation”
Who should own the Digital agenda? • Ultimately, ownership lies with the CEO, as digital
transformation affects all areas of the business. However, in reality, few CEOs have the capacity to drive the transformation whilst managing existing operations. Enter - the Chief Digital Officer
• The CDO reports to the CEO and strategically aligns all cross-functional digital activities and customer facing technology projects to drive organisational transformation
• This transformative role focuses on leveraging consumer insight and digital expertise to improve business performance and drive shareholder value. By driving digital innovation, a CDO can successfully accelerate the transition from legacy to new business models
• The responsibilities of a CDO need to be fluid, as the digital landscape is constantly evolving. The remit is highly dependant on the nature of the business, their challenges and the level of digital maturity across the organisation, which is typically fragmented and/or insufficient
• Even for traditional, established companies, the creation of a CDO is not a choice. It is a strategic imperative to enable them to compete against companies born in the digital age
How business critical can it be? Kodak
• Early investors in digital photography, developing their first digital camera in 1975, but discontinued further investment
• Instagram, the simple photo sharing free app, was bought by Facebook for $1bn in 2012, 15 months after it's founding! With 13 employees, the $77mn per head cost set the record for the most expensive business deal
• A few months later, Kodak declared bankruptcy
Blockbuster
• Turned down the chance to purchase the fledgling Netflix for $50mn in 2000
• The rapid rise of online streaming from the likes of Netflix and LoveFilm made Blockbuster's bricks and mortar business model practically obsolete
• Filed for bankruptcy in 2010 after failing to transition to an online, digital business model and was defunct by 2013
What are the barriers to Digital Transformation? According to CIO Insight, there are 6 key barriers
• Recognising the need to tackle digital transformation is an organisation's first step to
overcoming barriers 1, 2 and 3
• Securing a CDO will address barriers 4 and 5
• Finding a CDO that can work effectively with the CIO will rectify barrier 6
• Successful digital transformation relies on it being front and centre of a company's strategy
• A number of CEOs are apprehensive about committing to digital transformation due to fear of cost and complexity that upgrading systems, processes and people will bring. However, the days of large, lengthy IT programmes are behind us. Today, business technology moves at an agile, responsive pace and the CDO is at the heart of delivering modern solutions for customers and businesses alike
• Key message - recognise the importance of digital, secure a first-rate CDO and unlock digital's full potential
1. Fuzzy business
case2. Unclear
roles3. Limited funding
4. Lack of Digital IP
5. No urgency
6. Poor IT systems
What is your Digital recruitment challenge? There are a number of challenges, some obvious and some less so DIGITAL IMMATURITY
• 'Digital’ is a relatively new market force and the landscape is in its infancy - naturally, questions are being raised across Boardrooms around ‘what is digital’ and ‘how do we tackle it’?
• The evolution of the CDO role means it is yet to be clearly defined with set parameters
INTERNAL CANDIDATES
• The composition of a CDO represents the skill-sets of three individuals potentially already in your organisation - those that lead Marketing, Technology and Commercial functions
• It is likely that at least one of these individuals would like the opportunity to lead your organisation's digital transformation, but are they genuinely best placed?
HIGH DEMAND, LOW SUPPLY
• Globally, only 7% of organisations currently have a CDO. Gartner predict this will exceed 25% by 2015
• There is a limited supply of established CDOs and therefore they are highly sought after and also well remunerated
CULTURAL CHANGE
• It is important to select a CDO that can successfully manage the shift in dynamic and cultural change that their arrival will inevitably bring, particularly amongst the C-Suite
• Securing a CDO that can work effectively with your CIO and CMO is critical to the success of digital transformation
TIME PRESSURE
• Failure to act soon will result in losing ground to competitors, shareholder value and creating space for new entrants
• It can also have a negative impact on staff retention. A 'digital organisation' typically improves efficiency, increases job satisfaction and empowers staff
Dispelling myths and misconceptions A knowledge gap at Board level often leads to over-simplification
• Digital transformation is more than just social media
• 'Going mobile' runs deeper than company Facebook and Twitter accounts
• Digital is not just media, marketing and PR
• Having a digital Desktop environment does not constitute as digital transformation
How can we help?
Understanding what good looks like
• With digital constantly evolving and the emergence of the CDO relatively new, it can be confusing to understand what type of digital executive your business requires
• CDOs come in various shapes and guises, with very different and diverse backgrounds. Broadly speaking, they can be clumped in to three categories:
1. Content-based - they work in the Media, PR and Advertising space, which constitutes approximately 70% of the UK CDO market
2. Consumer-based - they have transitioned from eCommerce leadership to take on a digital role in the broader sense of the term; eCommerce being one vertical
3. 'Disruptive innovators' - they have grown up in digitally agile, dynamic organisations that are high-growth, fast-paced and demanding environments. They have probably cut their teeth in pure-play digital firms, start-ups and consultancies
Appreciating the difficulties of CDO talent acquisition
• It is difficult to identify someone with strong business acumen, who is clued in to new media consumption, consumer habits and technology trends & developments, whilst also being senior enough to handle a true CDO position and representing a good cultural fit
• Finding the right Search Partner who understands this evolving market is key. We have formalised our digital offering to reflect our knowledge and success in this space
Track record
Most recently we have partnered with a large British retailer, a PE-backed retailer and a FTSE250 organisation to secure their first ever CDO. Each client needed to transition from an offline to an online business in order to remain relevant and competitive. Therefore, the CDO position was created in order to lead them through their digital transformation journey.
Other notable successes include:
• Chief Development Officer - Digital start-up
• Head of Commercial, Digital & Media - Premier League Football Club
• VP Mobile - US media business
• eCommerce Director - British fashion retailer
• Digital Programme Director - FTSE100 grocery retailer
Sources - Bell-Pottinger, CIO Insight, MIT Sloan Management Review, The Second Machine Age by Erik Brynjolfsson and Andrew McAfee, We Are Social, Strategy&, Gartner, CDO Club
Images - mkhmarketing (The Art of Social Media), Sean MacEntee (social crm), Yoel Ben-Avraham (Solving jigsaw puzzle), Sean MacEntee (apps)
Contact us
We would welcome an opportunity to discuss your digital challenges and opportunities, with a view to providing our perspective on how best to attract the optimal digital talent that will best complement your existing board. Sam Burman - Consultant, Digital & Technology Transformation165 Fleet Street, London EC4A 2DYDL: 0207 806 1647, M: 07841 [email protected]