Continuing growth of technological capabilities is changing the business landscape at an incredible speed for a wide range of industries worldwide. This ongoing evolution and the digitization of every aspect of our lives – the way we communicate, work, drive, buy our coffee – results in a vast amount of data being produced every day. According to McKinsey, a global management consulting firm, the world’s data is now doubling every two years.
And the consumers of this digital tsunami are coming from every corner of the business world. Not just departments within newer companies that were born in the digital age but those in older “traditional” companies hoping to compete in a brave new world. The marketing department now wants to run digital campaigns with web analytics built in. Sales teams want seamless and real-time connections to customers as well as to competitors. Everyone wants the latest mobile device and to try out the cleverest new app. And they all want it now.
Enter the Chief Digital Officer
To address these issues, a Chief Digital Officer (CDO) may just be the answer. Simply put, CDOs are transformational leaders who are digital-savvy and data-driven, and through marketing and management experience, can better enable companies in analyzing data and executing strategic plans to improve business and customer experience. It is also important to note that the CDO is not there to run the company infrastructure and make related decisions.
Companies are starting to see the value of a CDO. One example is Starbucks, which recently named its former senior vice president of Starbucks Digital Ventures as the newly created CDO. The CDO will provide oversight to all of Starbuck’s digital projects — web, mobile, social media, digital marketing, Starbucks Card and loyalty, e-commerce, Wi-Fi, Starbucks Digital Network, and emerging in-store technologies. The public sector is also embracing this trend, as demonstrated by New York Governor Andrew Cuomo’s recent hiring of a CDO for New York City. In order for CDOs to be truly successful and add real strategic and operational value, these actions must be stressed: balance short-term and long-term value creation, utilize a global perspective, and promote collaboration.
Balance Short-term and Long-term Value Creation
One of the biggest challenges faced by companies has always been managing the trade-off between short-term advertising and long-term brand building, and this is becoming even more important as companies continue to face profit-margin erosion and increase in fluidity and dynamics in the marketing space. CDOs who are active participants in marketing must keep in mind that although a portion of sales can be directly contributed to the effects of marketing investments, a bigger portion is the result of the harder-to-measure power of brand. Brand takes much longer to develop but it has far greater staying power than a single piece of advertising. Calculating short-term effects separately from long-term benefits can help CDOs isolate which marketing activities truly build brand equity. Effective and efficient budget and resource allocation can then be achieved.
Utilize a Global Perspective
Achieving strategic alignment requires leaders to have a comprehensive view of the business, and this is no different for CDOs. CDOs must see how technology and data – from all departments and regions — impacts the entire enterprise and must work to align different departments with a comprehensive customer-facing technology and data strategy. In other words, CDOs must have the right information and insights to break down silos and connect different disciplines and departments. Additionally, having a superb grasp on the roles of technology in a global context will allow CDOs and their companies to better leverage their technological and data capabilities to tailor and improve customer experience in a decentralized fashion.
To build support, CDOs should ensure other business leaders understand the CDOs’ roles and responsibilities and recognize that they are on the same team. This is particularly important due to the nascent nature of this emerging position which will now be viewed among traditional C-suite roles. Taking time to communicate with other executive leaders about the shape of the company and any shifting priorities especially pertaining to technology and data will allow CDOs to be more attuned to the business and make quicker and more precise adjustments. As highlighted in SEI’s EPIC model, CDOs must be part of the executive equation that is committed to “collaborative relationships and knowledge sharing increasing productivity, quality, and innovation in all endeavors.”