In the new digital information economy, who leads the transformation from the previous business model to the new one?
One world view comes from Russell Reynolds Associates, the industry benchmark in executive leadership talent.
I think they're basically talking about the same thing, only from very different perspectives.
And, before long, I think we'll see many more compelling report-to-the-CEO-directly roles where a progressive CIO background might qualify you to be the best and first choice as the new CDO -- the Chief Digital Officer.
The Big Ideas
The businesses that were "born digital" have an inherent advantage: they don't have to convert the legacy thinking, skills and business practices to the new world.
However, for everyone else, it appears to be a long, emotional and often frustrating slog indeed.
Dr. Weill describes the end-state of this fundamental transformation as a "digital business model".
Russell Reynolds describes as the key agent-of-change as the Chief Digital Officer -- the CDO -- responsible for leading the charge. Both concepts dovetail nicely, as we'll see.
And, as William Gibson famously said "the future's already here, it's just not evenly distributed". Words to live by :)
Indeed, I can see strong evidence in my customer interactions that both themes are already in play, and the forces behind them show no signs of abatement.
Meet Dr. Peter Weill
Actually, I was able to do that recently. I certainly appreciate his persuasive, enthusiastic and engaging presentation style.
He's long been one of my intellectual heroes. For example, his co-authored book "Enterprise Architecture As Strategy" fundamentally changed the way I thought about enterprise IT many years ago. Since then, I've always counted on him for fresh, deep insight into the world of enterprise IT, and he has never disappointed me. Indeed, our own EMC IT team brings him in periodically for a heavy dose of "strategic thinking".
At our recent EMC IT Leadership Council, we asked him to come in and share his latest thoughts. He did just that, and we all had to step back and think hard about what he had to say.
He presented a very strong case that the corporate world was rapidly heading towards a digital business model; one where the levers for value-add and competitive advantage are quite different than in the physical world.
Dr. Weill tends to pack a lot of very deep and interrelated concepts on his slides. They take a while to intellectually unpack, at least for me.
His opening argument is that -- thanks to the digital transition -- the corporate world is changing from place to space, that the customer focus moves from transactions to relationships, and that the product paradigm gives way to a service paradigm.
Because of this fundamental shift, a new "digital business model" blueprint is required -- one that orients around content, experience and platform.
If you're a regular reader of this blog, you're probably nodding and agreeing. So far, so good.
Designed-For Vs. Added-On
He then takes it up a notch, much to the audience's discomfort. He makes the case that simply adding on "digital stuff" to a traditional model usually won't compete well against a true digital business model that was designed from the ground up to compete in this new world.
He argues for a complete rethinking of the customer's needs in the digital world, what content is consumed as part of satisfying those needs, how the experience is packaged, and -- most importantly -- the strategic "platform" that allows not only delivery but increased investment in differentiation and enhancement.
Enter very long and somewhat familiar discussions around mobile devices, social communities, big data analytics, easy-to-consume apps, next gen app platforms, etc. etc. Indeed, I can take almost all the new themes in IT (including many I've blogged about), neatly wrap them around this construct, and quickly answer the Big Why all this digital stuff is important.
All of these IT threads form the fabric of his proposed digital business model. I wonder how many IT and business leaders look at it this way?
Familiar (And Less Familiar) Examples
What better place to start the discussion than the uber-example of Apple, and their digital business model?
Although the metrics are breathtaking from just about any perspective, it's important to keep in mind that -- at one time -- Apple saw themselves in the business of selling physical devices (e.g. computers).
Indeed, think back to when Apple changed their branding from "Apple Computer" to "Apple".
Clearly, someone had a bigger picture in mind :)
After going through a number of "born digital" models, he put up a somewhat less-familiar example: USAA.
In the world of consumer banking and financial services, USAA stands well apart from their peers. Their customer satisfaction numbers and NPS (net promoter scores) are in a league of their own.
Dr. Weill can clearly diagram the elements of USAA's success against his digital business model.
Digital Business Models and Net Promoter Scores
In an even more intriguing conceptual mashup, Dr. Weill invites the audience to correlate progress towards a digital business models, and the proverbial touchstone of strategic long-term competitive differentiation: Net Promoter Scores.
The thinking is simple: those organizations with good digital business models have comparatively strong and increasing Net Promoter Scores, and those that don't -- don't.
He goes further with the observations that there are plenty of opportunities in various industries where NPS averages are characteristically low, which implies there's ample opportunity for someone to build a "digital business model" that moves the needle on NPS, profitability, etc.
Serious food for thought.
Even for us at EMC. You start thinking "gee, how well are we doing on that?" I'm not sure I like the answer.
Back To Russell Reynolds And Associates
All of this rich thinking brings up a thorny question: if you do agree that establishing and nurturing a digital business model is a matter of some strategic urgency, who will lead the charge at an executive level?
Clearly, this important role doesn't neatly fit into most established categories: CIO, business unit leader, marketing leader, etc.
RRA makes the case for a relatively new role -- the Chief Digital Officer, or CDO for short.
In their recent article, "The Rise Of The Chief Digital Officer", they make a strong case which makes interesting reading.
But I don't think they went far enough.
If I was looking for a CDO for my business, I'd be interested in the following:
- a deep familiarity of how existing digital business models work, key strategic choices that need to be made, etc.
- a sense of supporting organizational capabilities required by function (marketing, IT, sales, customer support, etc.)
- a "digital native" who can deeply empathize with how people prefer to interact with companies in a digital world
- someone with decent domain knowledge of many of the supporting enabling disciplines: social, mobile, analytics, apps, etc.
- a good handle on the "as is" of the current business and industry dynamics, and scenarios for incremental yet expedited evolution
- a "change agent" with passion, powerful communication skills and strong vision, yet trusted by executive management
From CIO To CDO
In my travels, I consider myself fortunate to occasionally meet CIOs and other IT leaders who could be strong candidates to meet this new leadership role.
When I talk about these topics with them, I often think they see themselves working towards this direction from within their present role in IT.
I'm starting to disagree.
Because when it comes to the brave new world of digital business models, it's not really an IT thing.
It's a business thing.