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.

Crowdsourcing a revolution

On February 11, a revolution in Egypt culminated in President Hosni Mubarak resignation as President. As stated by CNN, "Inspired by a revolt in Tunisia and a page on Facebook", over 18 days mass protests coordinated predominantly through social media and cell phones (Twitter, Facebook, texting) brought down a dictatorial leader who had been in power for 30 years. The role of Social media in Mubarak's downfall has been hotly debated. On the one hand are the legions of news media outlets and bloggers who view Egypt as the first (but not the last) crowdsourced revolution (see The Instrumental Role of Social Media in Egypt on http://www.cbsnews.com/8301-503544_162-20030611-503544.html and E. B. Boyd's How Social Media Accelerated the Uprising in Egypt in Fast Company http://www.fastcompany.com/1722492/how-social-media-accelerated-the-uprising-in-egypt). They argue that the speed and efficiency of the revolution was directly attributable to the social media tools available to the drivers of the revolution, disenfranchised 18-24 year old Egyptians. If not for these tools, Mubarak would have rounded up and captured the leaders of the movement before they got traction with the general populace, and he'd still be in power today.

On the other side of the debate are those who feel social media's role is grossly overstated(see Malcolm Gladwell's article "Does Egypt need Twitter" in The New Yorker http://www.newyorker.com/online/blogs/newsdesk/2011/02/does-egypt-need-twitter.html#ixzz1CwFMDA3b, and Jaikumar Vijayan of Computerworld at http://blogs.computerworld.com/17810/is_the_role_of_social_media_in_egypt_being_overstated). They point out, quite rightly, that crowd based revolutions have occurred throughout history (French Revolution anyone?) without any electronic social media tools.

While both sides have a valid point, it is clear that crowdsourcing and social media tools played a key role in the overthrow of the Government. With the speed of news dissemination and the ability to engage others quickly for protests, social media played a key role in moving from first protest to resignation within 18 days while providing a level of anonymity for the leaders until momentum clearly pointed to Mubarak's downfall. The key point here is anonymity for the leaders of the movement. With obscure Twitter and Facebook ID's, Mubarak's secret police didn't know who to round up. Traditionally despots have found and silenced opposition leaders before they could gain traction. In this case, without cooperation from two US based companies several thousand miles away, they couldn't find the individuals to arrest and interrogate. Finally, Social media tools are public (Twitter is publishing "Tweets from Tahir", a book of tweets that occurred during the revolution), which provides international support, sympathy, and ideas to help a movement succeed.

It took 4 years for the French Revolution to move from the storming of the Bastille to beheading Louis XVI. Wonder how much faster it would have happened today?

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