The past few decades have seen an explosion in the number of C-level roles at the top of global corporations. Many of these are company specific, trendy or just confusing (how is a Chief Information Officer different from a Chief Knowledge Officer?). But the overall trend shows just how complex and specialized running a corporation has become in a time of accelerating, disruptive change. New leaders with new skills truly are needed to survive in this environment, but this also demands regular rethinking of some current C-level roles.
In my role with technology companies (which today means all companies), I’ve seen this turbocharged evolution hit the role of the Chief Information Officer. Just within the past 12–18 months, the role of the CIO has quickly been transformed.
The CIO’s office fills a crucial need, but may be the wrong “tool” for meeting the demands of the Digital Business age. The CIO began as a technical pathfinder for companies wrestling with early digital and networking needs. It was viewed as (and typically still is) a back-office, G&A-budgeted function, a cost center supporting SAP/ERP platforms, which today are increasingly legacy systems. The CIO role was measured by the number of company servers, how many employees worked in the data center, and how often someone yelled, “The network is down!”
The past decade has seen the pace of digital change in business push the CIO out of the back office and into a sometimes-uncomfortable new role — the company leader for digital transformation. Once tucked away in the CFO’s chain of command, many CIOs now have front-and-center attention and new responsibility for plotting digital strategy.
With new responsibilities for incorporating digital change into strategy, some CIOs are being recast as Chief Digital Officers (CDOs). Traditional responsibilities for overseeing company platforms and systems, while still critical, are gaining powerful added responsibilities under this newly created CDO role.
Sounds impressive, but I’ve seen many companies struggling, with a CIO role that has one foot still firmly stuck in the past. More of the company’s data processing is being outsourced to cloud services like Amazon’s AWS and Microsoft’s Azure. Also, C-level functions that once depended on the CIO to manage their tech selections are now handling it directly. The Chief Human Resources Officer is making the call on new HR platforms (while dealing with issues like online hiring and the gig economy). The Chief Marketing Officer is making the investments in marketing automation and ad tech systems.
Meanwhile, the legacy data systems that are being retained still eat up something like 80% of the tech budget, yet remain crucial to the company’s success. Despite their lack of sex appeal, these ERP systems are needed to build products, make payroll, invoice, and all the other basics of any company. Without this basic plumbing (and someone to manage it), none of the fancy sci-fi stuff will happen.
And what about that scary new world with its digital disruptions and opportunities? Technology and digital demands have moved out of the back office to take over the psyche of the C-suite and the boardroom. Pioneers like Amazon are shaking up everything we know about retail by erasing the friction, distance and costs of commerce in sector after sector — and every intelligent business leader today knows their sector is next.
Whether your business model is B-to-C or B-to-B, rapid, digital upheavals like big data, mobile commerce, cloud computing, AI and machine learning are now business realities. Whether it’s creating a seamless online buying experience, targeting your most profitable customers with artificial intelligence and deep learning insights, or running reverse auction sourcing on the web… it makes no difference. Major companies are realizing that technology is no longer just a back-office cost center — it will either transform you, or leave you behind.
To survive in the new business era, the company needs a digital transformation leader. The responsibility of incorporating macro tech trends into company strategy is a role that must be elevated to the highest level of the C-suite. Changing the title and duties of your CIO to Chief Digital Officer may not be enough. A dedicated, planned chief digital role should bring leadership to all of the company’s technical and transformative opportunities, serving as a visionary, trendsetter, production and “tech consigliere” to the CEO and the leadership team.
I see this evolution at work at companies on whose boards I serve. At Schneider Electric, our CIO stepped up to become our effective new Chief Digital Transformation Officer. At Volvo, our CIO reports to the new CDO position. My other boards are likewise closely involved in seeking out the digital leadership we know will be needed.
As this suggests, addressing these digital leadership concerns is a boardroom matter. What can your board do to oversee digital transformation? As directors, we should lead the strategic discussion on digital transformation, and support new company structures, budget and talent that embrace emerging technology change. Here are some ideas:
Keep abreast of macro tech trends. Support management research on innovative digital business models and ecosystems, like the marketplace model. For example, should you partner with Amazon and Alibaba or stick with current stocking distributors? Forward-looking boards are creating tech committees to keep track of these trends, incorporate technologies and measure success.
Ask provocative questions. Ask how the company is looking at digital transformation. How does the CIO fit in with coming needs, and what are their objectives? Does the current reporting structure enable success? What are we doing to enhance the brand and make our business model more contemporary and effective? How are tech spending budgets reflecting your priorities?
Make sure management is measuring digital success. Metrics like the net promoter score, Klout influencer score, social sentiment score and conversion of leads can help measure the success of your digital transformation model. Make sure your management team is using such quantitative measurements, analyzing data, and gleaning insights in an effective way. Request that they present this annually at your strategy offsite meeting. Do management rewards, incentives and promotions push toward innovation — or playing it safe?
Ultimately, your company’s technology oversight structure reflects how it values that technology. Make sure that this structure is a business enabler, not just a cost center. In today’s environment, all organizations need a tech leader who embraces tech trends and actively integrates them into the company’s strategy.