Digital Transformation » Who owns digital?

Digital is providing a unique challenge to all industries.  Of course, it can be seen as a technologically driven change which is transforming the ways in which organisations go to market and interact with their customers.  But it is more than that: it is a new way of doing, leading and managing business!

As a result, many organisations grapple with the problem of who should own the digital agenda: should it be the chief technology officer, chief marketing officer, chief strategy officer, chief operating officer or a chief digital officer?

The extent to which this issue is exercising the minds of organisations was reflected in the finding in the Deloitte Global Human Capital Trends Report of 2016 which discovered that organisational structure had rocketed to top of the agenda for business and HR leaders worldwide with 92% rating it a key priority.

How you define and design your organisation, while identifying and developing talent and leadership, is a key differentiator in a digital transformation initiative.

In reality there is no one answer to this question, no one size fits all:  it will vary and will be dependent on the stage of digital development within the company.  All of the senior candidates I listed earlier could develop a reasoned case to own digital:  it undoubtedly sits on the boundary line between marketing and technology, driven, as it invariably is, by data analytics and customer insight; it is also clearly a strategic issue and one that will probably generate the biggest transformation programme within the organisation.

As a result, when assessing how to respond to the digital agenda in any particular business it is important to be aware of a number of key factors:

  • Digital potentially transcends all elements of an organisation: it can impact the way it reaches its customers, communicates with wider stakeholders, manages its internal operations and delivers its core services
  • Digital is not just a technology issue: it is a people, process and technology issue.  Technology is a key enabler in the digital world but for it truly to have an impact the technology will need to address key business imperatives and change key processes and the way in which people work
  • Digital is a strategic issue which needs to be assessed in relation to the business as a whole; it cannot be addressed piecemeal through unrelated projects or minor enhancements – it needs to be supported by a fundamental re-evaluation of the way the organisation does business and the role of digital technology within this context
  • Digital provides many options. It is important that those chosen are fit for purpose and truly cost-effective for a business and are not driven by fashion or inappropriate technological innovation
  • Because digital is a strategic issue which transcends all aspects of a business, it needs to be owned at the top level of an organisation: CEO / COO / Board level and driven through as a co-ordinated programme with clear accountability and responsibility.

Which way forward?

Although digital is fundamentally a strategic issue for organisations, there are different pathways to take. The level of maturity exhibited by organisations in relation to digital will be another key factor affecting how it’s approached organisationally.

In broad terms there are four clear models:

  • Tactically applying digital in an opportunistic way focused around existing business objectives, generally leveraging existing structures with specialist input. The COO and business unit CEOs may well be key drivers here.
  • Strategy driven, leveraging a central team to co-ordinate and prioritise digital initiatives across business units, linked to the overall business plan. The team provides leadership and key skills in implementation. A CSO or chief digital officer or a transformation focused COO may take ownership in this situation.
  • Transformation driven on the back of a well-articulated and communicated plan driven by the business units. In this model the centre of gravity will be flowing back to business units supported, perhaps by digital champions and a smaller and more transient Centre of Excellence
  • Business as Usual – where digital operation and thinking has become the norm across all parts of the organisation.

In a recent NJR survey we discovered that COOs are increasingly becoming more strategic and being asked to focus on major transformation programmes; at the same time CSO’s are also becoming more operational.

It is hard to escape the conclusion that this crossover of the two erstwhile very different roles is being driven by the drive towards digital which is being experienced by all organisations.

In reality the impact of digital is much more far-reaching and fundamental than deciding ‘who owns digital’; it is about a major shift in overall organisational structures from traditional hierarchical and functional models focused around business processes and activities, to interconnected cross-functional, flexible ‘networks of teams’ to create a more customer-focused, agile and responsive organisation.

Agility, speed of movement and of change is the key to success:  large, long-established companies are being driven by the digital imperative to exhibit the characteristics and impact of new, entrepreneurial start-ups but on a much larger and more complex scale.

At the extreme some of the start-up digital structures seem to be defined by no structure at all.  For example, Valve, a much-studied US software company, has no hierarchy and no defined strategy. Employees are encouraged to determine for themselves what projects they should undertake and to convince their co-workers of their case.

According to a study by L Kelion in 2013, Valve employees were 4x more productive than workers in Google or Apple in terms of market capitalisation and 10x more productive than peers in the video-games industry.  Another company, Zappos, a US-based shoe retailer operates on a self-governing holocratic operating model where there are no hierarchy, job titles or managers – Zappos was ranked 86 on Forbes 2015 ‘Best Companies to Work For’ list.

These are extreme models and it is not necessarily suggested that all organisations should see these as desirable end states but they are indicative of how digital is changing received wisdom and norms not just in the way organisations perceive and respond to customer needs but also in the way they need to organise themselves to be successful in the fast-changing digitally-driven world.

Conclusion

It is a mistake to see digital as a technology issue – like everything else in business today, technology is fundamental but only as an enabler.  It is changing how companies gain knowledge and insight about their customers and then respond in an agile and effective way at great speed.   This is impacting on ways of working and as these processes change so the people structures, talents and mindsets that underpin them need to change too.

As a result, digital is redefining role titles and the skills that people will need to succeed in the new digital world.  Siloed, functionally driven roles such as CTO or CMO do not have a place.  So perhaps the answer is that no single person ‘owns digital’ and that CXO titles will be another casualty of the digital revolution.

Instead, in the new digital world, multi-functional knowledge and skills, adaptability and networking will be key requirements for success at all layers in an organisation’s hierarchy.  That’s assuming that hierarchies themselves continue to exist at all, of course, in future state models!