Why companies need a Chief Digital Officer

At the beginning of 2007, the iPhone hadn't yet been launched, the iPad was a gleam in Steve Jobs eye, Pinterest didn't exist, and Facebook was a niche site for college kids with 15 million users. In roughly 5 years, the digital world has changed dramatically and, more importantly, the pace of change is accelerating given the rapid adoption curve of new devices and sites over the last 2 years.  Want proof?  Consider that  the Ipad is just over 2 years old, yet accounted for over a quarter of online retail sales last Christmas.  Or the rapid adoption of QR codes in both media and at Point of Sale.

This pace of change, combined with the fact that digital initiatives cut across multiple functional areas (Marketing, Sales, Technology, Operations, Customer Service, PR/Communications) has driven a growing call for a new, senior level role - The Chief Digital Officer (See Tim Bourgeois' article in CEO Magazine, or Maija Palmer's recent article for the FT - The Digital Career Switchover - sorry, you have to register to see it). Tim Bourgeois even provides a threshold at which point a company should hire a CDO.  If the company spends more than 5% on digital initiatives that cut across 3 or more functional areas, the company needs a Chief Digital Officer. The reason is simple - given the pace of change, having a flexible, cross-functional digital strategy is critical across three time parameters - 12 months, 24 months, and 36 months (beyond 36 months is almost impossible given the rapid rate of technological changes).  Having a senior level executive with the CEO's ear and keeping on top of the impact that emerging trends have on your business is critical to both the long AND short term success of the company.  Industry leaders such as Borders, Kodak, Blockbuster, and Blackberry have been destroyed due to underestimating the pace of change and adoption of new technology.

Digital doesn't fit neatly into any functional area.  Consider the following:

Marketing - The days of your brand, product, or service being defined by a 30 second TV spot or billboard are long gone.  How should you engage with customers across the purchase funnel (Awareness through advocacy)?  How do you use social media, mobile, crowdsourcing, loyalty/CRM programs, and other tools for digital customer engagement?

Sales/E-Commerce - Sales of products and services online are growing at double digits across virtually every category, and B2B sales have been accelerating.  But how does E-Commerce interact with physical retail?  How do you diversify existing distribution channels and place bets on emerging ones?  Pinterest wasn't on the radar 9 months ago and now is a leading sales generator for several retailers.

Technology - The move from local to Cloud based hardware and software over the last 3 years is revolutionizing technology, as is the move to increasing powerful mobile devices driven by employee adoption rather than business adoption (look at how iPhones and iPads are replacing Blackberrys in the workplace). How will the growth of voice recognition software affect business processes going forward (think SIRI)?


Operations - iPads have moved to the factory floor and into stores, supply chain initiatives are rapidly replacing proprietary networks with Cloud based resources, and customers are getting used to less paper and more online interaction.  But which SaaS companies are the best fit for a business?  Which ones will be around in 3 years?  Where is technology and process re-engineering going?  Given the long cycle times to re-engineer a part of the supply chain, are you sure choices being made a year or more out are the right ones?

Customer Service/Experience- The old adage was, if a customer is happy they'll tell 2 friends, if they're unhappy, they'll tell 10. With Social Media, that becomes thousands. Understanding customer expectations, leveraging advocates, and engaging with them to gain insights on process, product, and promotional improvements are critical for success in building the business.

PR/Communciations - PR leaders took the initiative a few years ago to "own" social media in most organizations, and have been successful using the Internet to optimize company communications for SEO and pickup.  In terms of Social Media however, the challenge has been that digital customer engagement goes well beyond communications to touch on customer experience and marketing, which has created conflicts within larger organizations over ownership and messaging strategy.

The new CDO has to work across all of these areas, and ideally has some level of experience in at 3 of the functions with respect to using digital platforms.  (S)he must be able to work cross-functionally, be a team player, and be comfortable that specific executional resources should reside within the appropriate department to maximize success.  Will this become an established C-level role within the next three years?  If not, companies risk the fate of being in the buggy whip businesses as cars fill the road.

Great uses of Mobile

I've struggled with smartphone versus desktop Internet for a while, but now I'm seeing some great uses of mobile that truly address customer needs. My new favorite is a simple SMS txt service - CooCoo (266266) - offered by Metro North. You txt where you're going (for example, Grand Central or GCT to Larchmont), and it gives you the next four trains to that station (departure and arrival). When you're in New York and on the run, its a lot better than fiddling with a paper schedule. They now offer cross-street information through the same service. Now wouldn't it be cool to offer plane and Amtrak information in the same way? How about movie times (for example, Clearview Cinema, Mamaroneck and back comes the next two showings of each movie. Or do it by movie through Fandango by just inputting the movie).

Another good one is "Skip the Line", a trivia game created by Ask.com in conjunction with Six Flags (http://bit.ly/imaQAy). Game does just what you'd expect - you answer some trivia questions successfully, and you get to move up the line at a Six Flags ride. Great use of geolocation to solve a customer pain point. Of course, you have to have an iphone and download the app to play.

These two, plus seeing my daughter's friends obsessively "check in" via Foursquare to get local coupons and freebies, have made me a lot more bullish on mobile.

P-Comm - Participatory Commerce and the next wave of Social Marketing

Its been called Crowdsourcing, Social Merchandising, Social commerce, and a host of other names. My favorite name for it is Participatory Commerce (P-Comm), which I'd love to take credit for (I will take credit for the shortened version - P-Comm), but Mark Pincus (founder of Tribe Networks and Zynga, which counts Mafia Wars, Cafe World and Farmville among its addictive online games) coined the phrase in October of 2005. Essentially, it means that the classic one way model of the marketer developing his/her product or service in a lab or back room, and then using mass marketing with a lowest common denominator messaging strategy to sell it to consumers is quickly disappearing in several categories.

In the era of social networking, everyone is not only a critic, but can also become part of the product and marketing process. Some of the key aspects of Twitter reflect P-Comm, as their users created or defined many of the key elements of the service (including the name Tweets, #tags, and retweeting). The founders stepped back and let the users decide how their service should evolve, and then fostered initiatives that seemed to gain traction. Data indicates that ratings and reviews improves conversion rates on E-Commerce sites, as 70% of online consumers indicated they trusted opinions posted by other visitors (Nielsen Global Online Consumer Survey, 7/09). Blogs attract over 80 Million unique visitors, and mommy bloggers have become a key marketing partner for advertisers looking to reach mothers (At 1800flowers.com, we worked with Mommy bloggers to launch our Spot a Mom campaign last year, with strong results). Youtube has enabled anyone with a digital camera (or digital phone) to create their own mini-movies, and the world is a better place now that everyone can share the antics of their adorable pets. Last, but certainly not least, Facebook has reconnected millions of former roommates, boyfriends, girlfriends, and stalkers while providing a steady stream of what is going on in their lives.

P-Comm will take social networking and E-Commerce to the next level. How about asking your customers to create a new product or service for your company? Or asking them what offer they'd find compelling? Maybe they could develop your logo as part of a contest? We've already seen user generated commercials which advertisers have aired on the Superbowl, so why not outsource your advertising to your most loyal customers? The opportunities to have your customers create products, services, offers, and messages that are relevant to them turns one way marketing around and creates ownership. And if customers feel part of the process of creating and marketing your product or service, they'll be more loyal and more likely to provide the most effective marketing ever created - positive word of mouth.

Social Media and E-Commerce - Fad or Fundamental Change - Interview with Steven Groves and Guy Powell

Check out my interview on "Social Media and E-Commerce - Fad or Fundamental Change" at http://www.iirusa.com/upload/wysiwyg/2010-M-Div/M2208/downloads/MeasureUp_LewisGoldman.pdf