One analyst reports that by 2015 25% of companies will have a Chief Digital Officer (CDO) who resides outside of the IT department and is responsible for driving the digitization of research and development, marketing, customer service and the creation of new products and services.

Before you create this new role and contact your favorite executive recruiters, take a step back and ask a few questions:

• What is the scope of digital transformation for your company? Does it include customers? Products? Employees?
• Does someone have responsibility for some or all of this work today, but it’s not getting done?
• Where should this work exist within the organization?
• What skills are needed in the leaders and team?

I don’t have a problem with placing an executive in charge of digital transformation, if that’s what a company needs to advance its goals. I don’t even mind if the executive selected is someone other than the CIO. Based on past experience, however, I foresee significant issues with placing the CDO outside of the IT department.

We’ve been here before. Back in the 90s, companies established heads of e-Commerce and created separate e-Commerce teams to handle the digitization of the buying and selling transactions.  Unfortunately, these separate teams resulted in confusion, redundancy and resentment as these teams re-created much of what the IT function had established over many years prior. Plenty of time and money were lost before the e-Commerce functions were rationalized back into the product, sales and IT functions where they belonged.

History is on the brink of repeating itself. Digital transformation is the next wave of e-Commerce. The first phase was about selling to customers. Digital transformation is deepening connections with customers. We didn’t need a separate reporting structure then and we don’t need one now.

I think of the collection of market-facing, customer-oriented technology issues as simply another business domain, like supply chain, finance or human capital management.  Yes, it’s a new and rapidly changing marketplace, but it’s also one centered squarely on advances in information technology.

I see a few organizational approaches that could work within the existing enterprise superstructure, leveraging the existing digital conversations.  These alternatives depend on the skills resident in current IT leaders.

1. Rename the CIO role as Chief Digital Officer to emphasize the market facing focus for IT in your organization.  Keep the back office technology structures in tact.
2. Group the market-facing teams into a single unit under a CDO, in IT reporting to the CIO.  Many IT functions have a leadership role responsible for app solutions (eg, VP – Application Development).  This could be split into two – one market-facing under the CDO and one under a leader for back office solutions.
3. Organize all business solutions under the CDO and all back office and infrastructure under the CTO.
4. Orient market-facing technology responsibility with an existing CTO, who has strategic planning and management skills.

To bring in fresh, outside-in perspectives, consider strategic assignments from marketing, sales, customer service and product functions or a few external hires into a team based on one of the models above.

If you list all of the responsibilities for a new CDO role, I think you will see that much of it already exists somewhere in your organization.  Don’t confuse the need for new skills and renewed focus with the need for an entirely new, and separate, technology organization.  Executives might go fast without the IT organization, but they won’t get very far.

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Guest Post by Hemant Ramachandra

We’ve all heard the saying that information is power and that’s never been truer. Today’s consumers are now often armed with more information than the sales teams that serve them. As a result, the sales force is often at a disadvantage—needing to scramble to make sure they remain relevant to their customers.

Take the car buying experience as an example.

One of my most vivid early memories was accompanying my parents to buy a new car. We didn’t have easy access to car information, and we certainly weren’t surfing the Internet. While captivated by the mystery of what car would end up in our driveway, I could also sense my parents’ worry that they would be taken advantage of. This lack of information put us at the mercy of the salesperson.

Fast forward to purchasing a car during the information age—where the balance of power is now in the hands of the customer. Before even entering the lot, prospective customers come prepared with facts and price comparisons from online resources. They believe that they know exactly what they want and how much they should spend. How does a salesperson add value and remain relevant, when the customer knows more than they do about the cars on the lot?

Forward-thinking car dealers are changing the way they interact with customers. They are empowering their sales forces with real-time access to warranty, financing and inventory information—above and beyond what the customer is likely to have—with mobile devices. Even access to customer demographic information can help close the deal. The slightest edge on the fly can make a difference in how, or whether, a sale takes place.

The power of mobile evens the playing field between the sales-force and the customer, and it may provide a home court advantage for the sales team.

Car dealers are far from alone. One company I’m aware of wants to arm their sales force with only a tablet to enable them to conduct their daily work and take care of internal tasks through mobile applications.

Clearly, the power of information makes the difference in our digital world. More companies are catching on to the idea that whoever has the most information at any given moment will win the information war. In our Digital IQ survey, we found that respondents are investing more this year in mobile technologies for their employees than in any other technology. Mobile for employees was cited most often as the most important technology to increase innovation.

Yet, some companies are more serious than others. While some companies are diving into mobile, others are only dabbling.

Sometimes companies don’t innovate until they have to. They need customers and even their employees to push them into cultural change. That’s certainly the case with mobile communications. But, it’s only a matter of time before every industry is forced into the battle of information. Otherwise, the car in the driveway might be from the competitor’s lot.

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Guest Post by Ted Shelton

On a recent evening in Silicon Valley, PwC hosted the well-known author Geoffrey Moore and 15 CIOs and CMOs from some of the leading Bay Area global technology firms. Over dinner Geoffrey led a spirited conversation on the new challenges that CIOs and CMOs are facing – rapid expansion of digital tools and techniques as a part of marketing activities; blending of marketing with other functional areas such as customer service and product development; and resulting demands from the marketing organization on enterprise IT. Where once marketing was the smallest internal customer for IT services, in the next decade many predict that it will become the largest.

Geoff started the evening by framing the challenge through a historical perspective. For most enterprises, the role of the CIO has been to establish and manage the organization’s “systems of record” – those information services that form the backbone of business operations.  Inventory management, financial systems, manufacturing and planning, human resources… the imperative for these systems is that they are secure, reliable, and cost-effectively maintained. Thus the CIO’s job has been focused on planning, efficiency, reliability, and security. These are the value embedded deeply in the people and processes of a typical enterprise IT organization – the “DNA” of IT.

On the other end of the spectrum, charged with moving quickly and creatively while marshaling external service providers and communication channels, the CMO has little time or patience for a slow and deliberate approach. As technology has become increasingly important component for the CMO the natural impulse has been to source solutions externally. Powered by the broad trend toward consumerization of IT, marketing departments have been rapidly growing their digital operating footprint without engaging IT organization, by purchasing cloud services with corporate credit cards or engaging agencies to build digital destinations. Where the CIO has been focused on developing systems of record for the enterprise, the new digital CMO has begun building what Geoffrey Moore has called “systems of engagement” –open, interactive, and adaptable – the DNA of digital marketing.

The challenge, as our roundtable discussed, is that these new digital services can bring a variety of risks to the enterprise, especially as they become part of the critical operations and as the information and processes cross over from marketing to other functional areas.  Highlighted areas of concern included the management and protection of intellectual property, stewardship of consumer information, compliance with global regulations, and the need for processes to manage the multiplying number of accounts on public social media channels.

Both CIOs and CMOs in our discussion recognized that the intersection of these risk factors was creating an imperative for a new model of collaboration between marketing and IT organizations. In Geoff’s closing remarks he observed that the path forward will require experiments on both sides and a reminder that the stakes are high. Organizations that adapt to disruption outperform their competitors and so far in the short history of computers and the Internet, the greatest disruption has been the social, mobile and cloud technologies. The impact will be felt in every industry, and as they move forward CIOs and CMOs should be looking at how they build a new partnership that will allow their companies to benefit from both systems of record and the systems of engagement, develop a common roadmap, and together define the future of business.

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Every time I breathe the words Big Data to a group of business and technology executives I brace myself for a barrage of questions…. How is it different? What’s our business case? Where will we source the data scientists to drive deeper insights? How do we acquire the technology to process mountains of information at a rapid-fire rate? The silent question lurking underneath them all: What if we fail?

I’m not discouraged by their doubt. In fact, it’s quite the contrary. Their questions mean they aren’t prematurely plunging into Big Data and rooting around for random patterns without a plan to power the business, as I’ve seen in the past. Executives are starting to recognize that Big Data is much more than data and is beyond plowing though mountains of social media feeds. Approached with business goals in mind, Big Data is about gaining valuable insights into customers, products, markets and more and using that information to make better business decisions.

As I write this blog, the debate continues to rage about whether Big Data is the biggest buzzword of all time or an effective tool for changing the way companies do business. For us, the issue is settled. Seeing is believing, and we’ve witnessed first hand how Big Data is transforming how businesses are run. Here are some examples of Big Data revelations that have generated real results that are featured in our new white paper, “Capitalizing on the Promise of Big Data.”

• A leading global bank reduced loan default calculation time from a few days to a few hours across its portfolio of over 10 million mortgages. As a result, the bank is able to identify and hedge high-risk accounts much more quickly and effectively.
• A major life insurance company recognized that customer needs and preferences are evolving and so should their insurance underwriting and distribution process. Combining Big Data with predictive analytics, the company created a “model” life insurance market that resulted in dramatic changes in how it markets, sells, underwriters and distributes its products.
• A mobile telecom company conducted sophisticated time series of customer behavior to detect unknown predictors of customer churn. Through proactive account management, the company lowered the churn rate for those customers by over 30%.

Taking a bite-sized approach to Big Data is best. Launching one or a few Big Data pilots doesn’t require a substantial investment of time and money and eliminates the fear of failure that can hold executives back. Here are some specific steps to get started with Big Data LITE:

1. Learn – learn about the problem or opportunity, prioritize the key issues and form the hypotheses you want to test with the analytics
2. Insights – build a model (first on whiteboard or spreadsheet, then in analysis tools you are testing), analyze and generate insights and possible interventions, identify data from inside the organization (order forms, payments, sales leads, etc.) and link it with publicly available data (from market research firms, government agencies) that weren’t previously accessible, quantify the range of potential impact on key metrics
3. Test – conduct tests, see what works or doesn’t work and generate the learnings
4. Enhance – enhance models and plan to operationalize the analytics or interventions in the field and roll it out

In a way, Big Data is both a sprint and a marathon. You can realize an immediate impact on your business. For example, one bank we worked with analyzed a portfolio of 30 million complex cash flow instruments across 50,000 different scenarios in less than eight hours. However, getting to a point where the vast majority of your decisions are driven by Big Data will take time. Cultural change is a gradual process. For now, get started with a pilot project and capitalize on that “first-mover” advantage.

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The news that two major technology companies are summoning their teleworkers back to the office revealed people hold strong opinions about where employees should work and why. I’m hearing a lot of all or nothing thinking behind the telework talk.

Some contend that corralling employees into one location is critical to create a culture that breeds innovation. It’s why some companies invest millions of dollars in fostering “fun” work environments that cater to the professional as well as the personal needs of employees.

On the opposite end of the spectrum are the pundits who proclaim employees should wield the power to decide. They don’t mind if employees exist as far-flung satellites that never come together in the same room as long as the work gets done and the collaboration tools are effective.

Taking extreme views on either side of this spectrum isn’t the answer. We need a blended approach to where and how people work that takes into account the complexities faced today.

Don’t get me wrong. I’m a big believer in telework. As a consultant, I travel the globe. I have to engage my clients, co-workers and staff while I’m on the go. I’m also extremely productive at my home office or in a coffee shop, as are introverts who crave quiet and need solitude to create. In fact, more right-brained or knowledge workers excel when they are autonomous.

That being said, I also believe in the power of in-person communication. Sometimes you just have to bring people together in the same room. Extroverts certainly don’t mind. They plug into others like batteries to generate ideas.

In fact, the Economist Intelligence Unit surveyed 860 business executives from around the world and 75% believe that in-person collaboration is critical to solving increasingly complex business challenges. 82% felt they were better understood after in-person encounters.

What I found most useful about this survey is that it outlined the specific situations when face-to-face engagement is called for. Examples included:

• project kick-offs
• initial meetings
• brainstorming new ideas and innovations
• managing problems with many others
• crisis management
• coaching team members
• contract renewals
• strategic planning or discussion
• meeting new clients
• co-development of project plans
• contract agreements or expansions

Instead of blanket teleworking bans, we need to put triggers in place that unite people under one roof when it’s right. The above list is a great place to start.

I plan to make this the first post in a series on designing the workplace of the future. Are there certain topics you would like to see tackled?

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