Where does Digital Transformation Belong in the C-Suite?
Given its importance in growth for most companies how and from where does it get funded and where does the responsibility belong for execution? In some industries it may be more appropriate to belong to the Chief Marketing Officer and in others with the Chief Information or Technology Officer. I believe the days for this are gone and Digital Transformation needs its own leader and budget. We are in a situation where you must innovate or die and innovation is difficult when the CMO is just trying to close deals and the CIO is just trying to Keep the Lights On.
Digital transformation is a continuing reality as part of a long-term trend that affects all aspects of commerce and communication. All C-suite members must be responsible for being aware /informed/adept enough in this fundamental area to be able to wisely incorporate new, cost-effective digital tools to sharpen, speed-up, and automate functions to better serve stakeholders in their areas of functional responsibilities and contributions to team activities. With few exceptions, companies that attempt simply delegate digital curating and planning to a central function will suffer competitively when facing peers that have rightly challenged and equipped all of their senior team to think clearly about how to incorporate digital tools in local and enterprise-wide processes alike. This is analogous to the kind of paradigm shift in business thinking that occurred in previous decades when firms dealt with such innovations as freeways, electricity, telecommunication, fax machines, personal computers, overnight shipping, e-commerce, etc.
I love this line of thinking and this offers good and healthy debate. In my point of view and experience, let us first accept that technology is disrupting industry segment at an accelerated pace in the coming years, irrespective of which industry segment you are. Example: Block chain & its application.
Responsibility of digital transformation is with the C-Suite with the following lines of set up:
- Bring together a team talent with high sense of innovation and evangelists from across the organization without looking at an hierarchy or bureaucracy.
- Identify KPIs that needs to be monitored against the landscape of what requires to be achieved in your segment of industry and your organization current status on those KPIs.
- Ensure transformation leader or innovation leader own this and are ready to take up this challenge to lead with complete empowerment and not the standard micromanagement approach. Ideally, this transformation leader should report into one of the C-Suite leader to ensure accelerated move towards flawless execution with try & fail, try & fail approach as part of empowerment.
Digital Transformation leads to right culture of innovation and a need for the organization to go to the next level, definitely has to have budget. Personal experience, report into CEO or Chief Customer Experience Officer, depending on the size of organization and goals of how fast one has to experience results for customer centricity and value for customer.
Some highly-focused business models have a natural owner that is, in effect, continuously driving/shaping the model - whether it's the CEO, CFO, CMO, CTO, etc. - but the CEO and governing board ALWAYS own this responsibility as well as the oversight of the performance and outlook of the C-Suite driver of such a highly focused product or service. Otherwise, complacency, pride, or personal limitations can begin to get in the way of continued success.
I've read that 80%+ of digital transformation projects fail to live up to their full expectations. How many of you would recommend that the c-suite get out of the c-suite and walk the factory floors, visit the showrooms, talk with the employees, spend time with customers before making decisions that affect so much more than the bottom line.
If I could make the rules, digital transformation would live in a DESIGN DEPARTMENT, one that was geared and staffed to optimize systems FOR people first, then skilled to make those systems profitable for shareholders. Maybe we need a CDO, chief design officer?
I wrote about this point in CMO/Australia last year. The bottom line (design-wise) for digital transformation is not simply to switch to a new and better process. Rather, it is to become (permanently and naturally) adaptive.
I think we are getting to the heart of the matter.
Things are increasingly more competitive -- eat or be eaten, disrupt or be disrupted, create something that generates net income early, buy or build, constantly increase the harvest, stay ahead, stay relevant.
To do these things, constant transformation will be required, all stakeholders touched, all parts of the organization will need to change -- within and above the silos. As such, the team doing the design will need access to all, cooperation from all, and the authority to cause all changes to be implemented completely and synchronously on a prioritized basis.
This authority comes from the sponsor. The "natural sponsor" is the first person to whom all of the parts report -- the CEO. The CEO's time-blocked schedule does not provide them with the time necessary to address even a fraction of the work necessary. They must adopt a new direct report to whom they change this responsibility.
Locally, we have been toying with the term "business architect" to define this professional business strategy/design/implementation leadership role. The typical candidate for this role would be a seasoned executive-level consultant from BCG with an MBA in marketing and finance, a passion for future tech, and an entrepreneurial spirit.
This role would operate many levels above the IT business architect role found reporting to the enterprise architect in many IT business units today. Done right, every business unit should have its own business architect matrix-reporting to the CEO's business architect, meeting weekly with their peers to bounce ideas around, share information, and coordinate their work.
Food for thought
I have to agree with Don Barefoot on this. If transformation is truly to mean transforming the business (and it rarely does) then you can't subcontract the job to any single CxO. No single CxO understands or is accountable for the whole business. Not even the CEO, who relies on the other CxOs to be specialists in their function. If the whole business is to be transformed, it has to be the board leading it, informed by the knowledge of people with real insights into what the tech can and can't do, what the customer data says, what real customers say and do, etc. So, detailed knowledge from tech, marketing, design are key, but so is detailed knowledge from any function which will be affected, so in the end it's the whole business. It's very unlikely any company will turn everything upside down at the same time, so this might still end up looking like a series of projects, but the exec team own the strategy and running the business, so they all have to own substantial change to the business, even if it's sliced up.
Also agree with Mike Wittenstein, although it's a tougher change to make - shifting people away from change as only the big disruptive projects, and into constant adaptation, with both big and small changes. That's a real culture shift, and most companies don't have the stomach for it.
26 months ago