It is now conventional wisdom that members of the C-suite in large organisations have no greater challenge than assuring that their firms adapt, survive and prosper in the digital age.
But who should drive the digital agenda in your organisation? Who should be kept far away? Is there a need for a Chief Digital Officer? What's the role of the CIO in all of this? In many organisations, the answers are not yet clear.
IT professionals often find such questions frustrating, essentially asking "What's the big deal? Surely digital is just a new, more fashionable label for IT! We're already responsible for managing all of that, so why all the fuss?" Isn't this all just semantics?
We don't think so. Our recent research initiative, Digital Leadership in the C-Suite examined the state of digital leadership today by interviewing C-level executives from companies across a wide range of industry sectors. Early on, it became clear that there are now serious digital leadership tensions in many boardrooms. Consider the following:
- Less than half of the companies interviewed believe that their executives are equipped to harness and lead major digital initiatives.
- Most Chief Information Officers (CIOs) instinctively feel that the digital agenda should be theirs by default, but only a third of today's CIOs are clearly being tasked to lead their organisation's digital transformation efforts.
- While successful Chief Marketing Officers (CMOs) can often make a strong case to drive their firm's digital agenda, the scope of digital will inevitably extend well beyond their remit and into functions such as R&D, Engineering, Supply Chain, and Talent Management.
- As a result, many firms are considering hiring a Chief Digital Officer (CDO) or appointing some sort of digital transformation champion, and this greatly affects top team dynamics.
These findings are consistent with what we see with our clients every day. While some companies have made huge strides, the majority of C-suite teams have yet to genuinely come to grips with the digital leadership imperative and need to do so soon. Many CEOs admit that the lack of sufficient digital leadership from senior executives is now a major barrier to their future success.
Implications for CIOs and Enterprise IT
Put bluntly, what most people now call Digital – apps, social media, mobility, the Internet of Things, advanced analytics, new business models, etc. - is often precisely those things that firms don't necessarily think should be managed by the Enterprise IT department, at least not in the traditional way. As one of our CIO clients put it:
"My IT leadership team and I now have an outstanding reputation for globalisation, rationalisation and cost reduction. Services are efficient and effective. Costs are better than the industry benchmark. And by and large, projects deliver on their promises, on time, in full. For the most part, the business agrees. But here's the crunch: while we are now known for efficiency and delivery, Enterprise IT is far from having a reputation for agility, business innovation or growth. Yet that is where all of today's Digital action is. So even in my case, I, as CIO, am not the obvious or even the leading candidate to drive our Group's Digital agenda in the coming years."
This doesn't mean that a digital and business savvy CIO and IT leadership team cannot take on the company-wide digital leadership mantle, but it does mean that in most companies, it won't be theirs by default. Indeed, CIOs who don't adapt to the new world will be increasingly relegated to managing the back-office plumbing; they must be seen as effective digital business strategists by their business peers. Otherwise, the digital role is probably out of their reach.
Does your firm need a CDO?
It's certainly not necessary for every company to hire a Chief Digital Officer but in some circumstances it may be a good idea to do so. However, our research showed that someone on the top team needs to be given formal responsibility for ensuring that the right digital agenda is formulated and pursued, and that digital is sufficiently well-understood and pervasive that it becomes part of everyone's job – in the C-suite and across the organisation.
The alternative is not attractive. There are still too many firms where the status quo prevails: an Enterprise IT organisation that is disconnected from or can't keep up with emerging digital business activities, a C-suite where 'technology is not my job' attitudes are still deemed acceptable, and isolated pockets of digital activity in marketing, engineering and elsewhere that have yet to coalesce into a real digital strategy.
Such firms will prove to be increasingly vulnerable to rivals who take the potential of digital technologies and digital disruption much more seriously. Eventually, leadership and digital leadership will become almost one and the same; but we are still a long way from there.
David Moschella is the Director of Research at the Leading Edge Forum.