What to look for in your next Chief Digital Officer

I am often asked to help people define what CEOs should look for in a candidate for the Chief Digital Officer position. My past eight years of digital experience have taught me that most companies tend to clearly see one or two sides of the job description and corresponding skill set, but cannot articulate in their entirety what should really be a multifaceted role – nor their expectations for impact or even outcome metrics.

Chief Digital Officer

This is my cocktail-napkin framework for the skills you should expect a Chief Digital Officer to bring to your company. A 2012 Russell Reynolds article listed part of them, but I believe this framework completes the scope of the role in important ways that were not originally covered; for more literature, see this McKinsey survey and this Forrester report (Forrester clients only). So, what does the CDO need to know how to do?

  • Online marketing, social media and digital PR. Most marketing and communication-focused companies, such as those in fast-moving consumer goods, are quite aware that the ways to drive brand awareness and engagement have shifted dramatically in the digital era; and that they need to move from traditional metrics, such as GRPs, to much more granular digital measurements. Market research, a cornerstone of many organizations’ plans, is largely shifting to online platforms, too; and digital listeners who can find the signal in the noise are in high demand. Yet, listening and communicating well in the digital domain are far from the only required capability; and what looks like the cutting edge today quickly becomes table stakes tomorrow.
  • E-commerce, digital distribution, multichannel. Retailers and manufacturers in many sectors are aggressively pursuing online sales: consumers are looking for your products online anyway, so hiding your head under the sand does not work, and in high-margin sectors such as premium and luxury goods a digital sales strategy is – at last – no longer shunned as damaging to the brand. Metrics here are about conversion, revenues and margins. The Chief Digital Officer will be the cross-channel integration champion in the organization, knowing when to push and where to stop: users will prize a seamless experience across a few channels much more than a complicated and fault-prone experience across many channels.
  • Online service and CRM. Customer expect you to be online, 24/7, to answer their questions, and no longer just at the other end of a toll-free number. What often starts as a marketing-focused corporate social media presence almost always needs to be complemented by strong online customer support capabilities; forward-looking banks, insurance companies and utilities are increasingly proving their worth in this arena. Here, the relevant metrics are customer service metrics; a digital customer operations mindset and expertise are needed, enabling in turn the generation of additional upselling and cross-selling opportunities.
  • Digital product and technology. The previous three quadrants extend what you are doing in the analog domain and can give you a competitive advantage: yet, it is only if you are able to reinvent your product into a profitable digital experience that you leave your competition in the dust. Media publishers, music and movies have struggled with the “profitable” part of the equation. Among successful examples, on the other hand, witness how Nike has positioned the Nike+ FuelBand at the center of a whole new Nike+ ecosysytem – remember, they used to make running shoes. A lesser-known but fine example of product redesign for the digital era is the new Getty Images watermark. From thermostats to cars, over the next few years all sorts of products and services will become very different from what we know today. If you’re not sure, go back and re-read Marc Andreessen on why software is eating the world. A good and easy-to-read guide to some of the disruptions is the recently published Age of Context by Scoble and Israel.

(Note that you can use this framework to get immediate clarity whenever a fuzzy digital project comes your way. Suppose, for example, that your team tells you “we ought to make a mobile app.” Is this a communication (or, worse, a vanity) app? a sales app? a service/CRM app? or an app that supplements, enhances, reinvents or revolutionizes your product or service? This way you can quickly define the right metrics and set your ambition levels.)

Underlying these four capabilities, your Chief Digital Officer should be able to foster a digital culture and nurture digital talents. Collaboration and knowledge sharing within the company must mean more than having an intranet, a digital suggestion box or even a prediction market: digital tools should foster your employees’ sense of community and belonging. Millennials thirst for transparency, openness and meritocracy; they will expect your company to be much more like an open-source-based software project and much less like the bureaucracy you grew up in. See this Gary Hamel talk if you’re not sure of what you should aim for.

In summary, a Chief Digital Officer is not just – as he or she is often portrayed to be – a good general management talent who has learned a few sexy digital marketers’ tricks. In my experience she will be much more impactful if she has a 360° vision of the future around her, not just of her product or industry; if she knows the front line well and has got her hands dirty with operations; and if she is unafraid to lead the evolution of the company’s culture.

Improving performance through better board engagement. From McKinsey

The opening McKinsey Quarterly for this year is one of the best issues I’ve read in recent years. (All the pieces linked here require a free registration). One article talks about making time management an organizational matter rather than leaving it to individuals; another one covers six social media skills every leader needs; another addresses increasing the “meaning quotient” of work. But the central set of features this quarter is about improving performance through better board engagement. I highly recommend reading all five articles:

Bonus feature: the first modern organization chart (1855), a true class act by railroad engineer and manager Daniel McCallum. You can see the board of directors at the bottom of this exquisite tree.

The world's first organization chart

Mundane organizations that work. More from Prof. March

It would be wrong to demystify heroic leaders without simultaneously celebrating mundane organizations. More from Appendix 2, “Mundane Organizations and Heroic Leaders”, in On Leadership:

Let me mention four components of elementary efficiency in organizations. They are neither novel nor mysterious; but they are, I believe, fundamental. The first of these, and I suspect the most important, is simple competence. Organizations work well if people in them know what they are doing. How is competence encouraged? In some very traditional ways. It requires appointment and promotion on the basis of merit rather than personal ties or irrelevant characteristics. It requires a division of labor, specialization, routinization, and training. […]

A secondo component of elementary efficiency is initiative. Organizations work well if problems are attended to most of the time locally, promptly, and autonomously. This is accomplished by delegation accompanied by instincts or rules of tolerance. If you are going to encourage initiative, you need to be tolerant of small deviations from what you would to yourself in the same situations. […]

A third component of elementary efficiency is identification. Organizations work well if persons in them take pride in their work and the organization. They have a sense of shared destiny, mutual trust, and collective identity. […]

A fourth component of elementary efficiency is unobtrusive coordination. Organizations work well if the autonomous actions of individuals are coordinated effectively, quickly, and inexpensively. […]

In fact, competence, initiative, identification, and unobtrusive coordination, and decisions about them, are at the heart of effective leadership. They are not grand; they are not heroic; they are not – for the most part – even interesting. […]

The contrast between the elementary things that make an organization work and heroic conceptions of leadership is striking. It is also potentially unsettling for leaders. Acknowledgement of the relative unimportance of leadership heroics is inconsistent with their interpretations of their own experiences. They do not want it to be true, and they do not believe it to be true. As a result, they overlook some things that seem to me quite fundamental to understanding how organizations work.

First, organizations work because of a density of ordinary competence throughout the organization. […] Organizations that work are those in which if someone sees a toilet not working, he or she fixes it. […]

Second, organizations work because subunits and individuals are interdependently autonomous. That is, they are left alone to do their jobs. There is mutual delegation and mutual confidence. Work is coordinated in a relatively unobtrusive manner, less by explicit interventions than by mutual anticipations. […] In short, organizations work better when organizational management is more like sailing than power boating.

Third, organizations work well because they have redundancy. Almost everyone is important but no one is indispensable, either over time or at a given point. If a task need to be done, there are several individuals, technologies, and routines available to do it. […] Without redundancy organizations are vulnerable to failure if any individual part fails; and that likelihood increases rapidly with increasing scale and complexity of organizational operations.

Fourth, organizations work because they have mutual trust without personal favoritism. Classic forms of trust, in families for example, are associated with favoritism. An organization requires a different form of trust, not confidence in mutual personal support but confidence that a job will be done well and with understanding of the job requirements of others. […]

Because of the ways in which we write and think about organizational leadership, and because of the personal success experience by which we prepare individuals for leadership, these mundane truisms about organizations are likely to be forgotten by leaders as they look for dramatic ways to make their marks upon an organizations.

The future of work and what we’ll have to learn

The structural changes awaiting us GenXers in work environments, careers, and employment relationships have been debated at least since Jeremy Rifkin’s The End of Work (1995). More recently, the macroscopic uncertainties facing GenY have taken center stage. For both generations, especially in Europe, there is a stark awareness that the concept of retirement our parents relied upon no longer applies to us: I have friends who retired at 58, yet my own expectation (currently being enshrined into law by the Italian austerity package) is that I’ll be well over 70 before I can draw a pension from the coffers into which I’ve been contributing since my first paycheck, 20 years ago this year.

Yet it is not just employees who will have to adjust to staying in paid employment much longer: it is also employers.

As employers, I am afraid we have no idea how to deal with this. Companies have, if at all, offered “early retirement” (say, a 3-year parachute to 55-year-olds) in order to downsize, restructure and make space for a few more young people at the bottom. Once “early retirement” means 68 or so, they’ll have to find work that vast masses of employees in their 60s can be productive at; perhaps part-time, with a different cognitive load (and physical effort), in different shifts or what have you. Have you ever been served by a call center representative in their 60s? I don’t think you have – but you will.

As employees, we will have to accept that not everybody can reinvent themselves as a “consultant”: people will just have to remain employed. We will also see, if organizations are at all meritocratic, the complete decoupling of the corporate pyramid from the age structure of the corporate population. It used to be that, as employees aged, a few managers floated to the top and the rest in their age group magically disappeared along the way (women, unfortunately, much earlier than men). No longer. Not only will we see people from our own generation at every possibile level in the organization (we’re just too many), but late in life those same people will have to deal – realistically – with having a boss much younger than they are. I am talking about employees in their 60s reporting to bosses in their 40s or even 30s. We haven’t seen this type of employment relationship, I believe, in the past half century or so. And yet this is the future of work, and this is what we’ll have to learn to deal with.

Gary Hamel: The Future Happens on the Fringe

How do we move from the theory and practice of management that were invented 100 years ago to building and running organizations that are fit for the future? Gary Hamel, in this short lecture, points out that we are the first generation of managers and leaders who has had to deal with an exponential rate of change;  our companies face hypercompetition; and any knowledge advantages dissipate quickly.

How can we then build organizations that are fit for the future? Today, “for the first time since the Industrial Revolution, you cannot build a company that’s fit for the future without building one that’s fit for human beings. Hamel suggests three mindsets. Have high aspirations (see the “reverse accountability” put in place by Vineet Nayar at HCL Technologies); challenge dogma, be a contrarian; and learn from the fringe. Because “the future happens on the fringe”. And the fringe – at least of you look at it from the perspective of a Fortune 500 corporation – is the Web: the Web with its openness, meritocracy, flexibility, collaboration: the greatest operating system for innovation ever invented.

“The values that today characterize the Web, we’re going to have to bake them into our organizations.”

Leadership and Debra Benton

The woman in the picture is executive coach, speaker and author Debra (D.A.) Benton.

You know that leadership is something I think about a lot. One of the most useful reference frames about leadership I’ve ever heard (and I owe this one to a select group of Stanford faculty) is that it’s not practical to think of leadership as the product of intrinsic charisma you’re born with: if you deconstruct leadership, it boils down to a set of behaviors you choose to apply deliberately, consistently and relentlessly.

Debra is not an academic; I think her books are among the clearest and most usable guides to those behaviors. I met Debra a couple of times many years ago and we’ve occasionally stayed in touch over time. She lives and breathes what she preaches. You can even tell from reading her: she’s not just telling you to “use short, sharp sentences”: she does it.

Her latest book, CEO Material, re-uses some of the themes in her previous books – the basics of her teachings haven’t changed, after all – synthesized in a crisp package. It’s all about how you get to be described as “memorable, impressive, credible, genuine, trusted, liked, cool, calm, collected, charismatic, comfortable, competent, and confident.” And that’s the way she is. Sure, it’s hard work, and I’m particularly bad at some of it (smiling to strangers in an elevator, striking up a pleasant conversation with the person sitting next to you on the plane), and I don’t do it all. But what I do, I do because I believe it works.

One more thing I particularly like: Debra’s style teaches you to infuse reciprocity and exchange (the stuff that academics tell you influence is made of) with kindness, courtesy, decency and integrity. There’s no sustainable leadership without integrity. Make all the fun you want about American leadership literature as self-help for aspiring leaders. As long as there is a moral compass guiding those leadership behaviors, I’m fine with it.

Being a student again

I loved being a student, and I love to go back and be a student again every now and then, even if it’s only for a week.

In 2005, I attendend the gut-wrenchingly good Stanford lifelong learning seminar called Interpersonal Dynamics for High Performance Leaders. Next week, with equally high expectations, I am off to “Customer-Focused Innovation“.  Read about it here, here and here in Prof. Sutton‘s blog.

Plus, it’s always good to be back in California.