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June 27, 2016
Digital Transformation 2.0
By: Narry Singh

‘Chapter One’ in the digital revolution is drawing to a close. Digital is no longer an add-on: it should be a core part of any business, and successful strategies in ‘Chapter Two’ will require changes to organisational structures and mind-sets.

The last decade has seen organisations develop their digital profiles: exploring e-commerce; hiring chief digital officers; launching apps and starting ‘incubator’ programmes. These efforts, characteristic of ‘Chapter One’, were aimed at adding digital features to a business. Now, digital is moving from an add-on to being central to any organisation, presenting a massive opportunity for those able to adapt in time.

The key to success over the next 5-10 years will lie in:

  • Changing organisational structures

  • Instilling a ‘digital mind-set’ in leadership teams


Organisations need a strategy for a digital era, rather than a digital strategy. They must:

  • Create new structures and incentives

  • Find ways to attract talent

  • Work with third-party partners

  • Move beyond an organisational mind-set that fetishizes owning everything

In short, they must become digital from the inside-out.

Organisations are already creating new digital roles, such as Chief Data Scientists or Chief Digital Officers (CDO). Many are hired from other industries – HSBC’s CDO is from Google, Argos’ from eBay – which has the advantage that they needn’t ‘unlearn’ anything about their new industries. These roles are catalysts though, rather than a long-term solution, and should be understood as transitional.

The Challenges

There are challenges to this type of structural change. Often, CDOs lack clarity in the authority they have – the division of responsibility between them, the Chief Marketing Officer (CMO) and the Chief Information Officer (CIO) is unclear. Equally, being fresh to an industry may make the politics harder to grasp, or mean internal processes are overwhelmingly complex.

Another risk is that CEOs see the creation of the CDO role as a solution in its own right, looking at the CDO as the answer to all of their digital problems, when in reality there are often deeper structural challenges. A large retailer might require its CDO to implement a new personalisation tool that will give promotions to customers, but if the CDO doesn’t have the responsibility for the several different groups and boundaries required then this is incredibly hard to do.

Reporting

Reporting structure is critical to the success of a CDO role. Traditionally they sat with IT, or in marketing, not acknowledging the fact that there is a lot of digital value outside of those functions. Reflecting that, most successful CDOs report to the CEO directly, and are given access and responsibility across a wide range of functions.

Ultimately the creation of the CDO role is a positive move by businesses, but it is a role that has an expiry date. It should be viewed as a catalyst for the change needed to create a fully integrated digital culture. However, it should be understood as a means to an end: today it could be very helpful, but if you still have one five years from now, you are in trouble.

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