Digital CEO: Leading in the time of cholera

Of all the trends I have come across at the close of 2015 and the start of 2016, the one I will keep is Charlene Li's on the Altimeter blog: “Digital Governance becomes a necessity”.

“While terribly mundane, many organizations will reach a breaking point in 2016 where the morass known as digital/social/mobile will require a wholesale review of how they work with each other and across the enterprise. Central to this effort will be the rationalization of the digital C-Suite...”

I agree 100%. 2016 is the year in which organisations will no longer be able to ignore the fact that digital has considerably changed the way they build relationships with their customers. And that has clear repercussions for the corporate governance model: Is the figure of the digital leader necessary, or can the CEO lead the company's digital evolution themselves? Can we perhaps allow ourselves a breather before starting our company's digital transformation process?

[This post was originally published in DIVISADERO, blog Actualidad, January 2016].

Some of the following pieces of evidence show that the change has ALREADY happened and that this year 2016 is the year to face the strategic impact of “digital” across every vertical:

• Mobile-only users overtook desktop-only users in 2015 (source: ComScore)
• Smartphone penetration is total (source: IAB)
• Having a mobile phone and using social media is close to 1:1 parity (source: ComScore)
• What Google does not know about you, Facebook does (source: ComScore, Statista, Sitepoint)
• Gaming is the most valuable content on mobile (source: eMarketer)
• Video is a form of content whose consumption through mobile keeps growing (source: eMarketer)
• The sharing economy and the “unicorns” have altered the rules of the game in many industries (source: Bloomberg, Fortune)
• Applied artificial intelligence can change users' purchase decision-making (source: Phys.org)
• Virtual reality kicks off its year zero in 2016 (source: IBT)
• The person-level view across different platforms is taking hold (source: AOL)

In my judgement there are no excuses for postponing the challenge. I think that with the evidence above there is little room left for reflecting on the opportunity. The reflection at this point is probably more about the “How” than about the “What”. There is some room left, though, for the “who”.

Users move faster than organisations in the digital adoption of new trends. Access to any innovation or trend has been democratised. In large part because users are no longer afraid to try, and even less afraid, if that is possible, to change service providers. And on top of that a trend appears that decades ago was one of the great barriers to entry for new competitors in an industry: Trust. Nowadays what is new is “cool” and what has always been there is just that, “what has always been there”. Has being solid lost its appeal? There are more incentives in large corporations to look like a start-up. And “start-ups” build their differentiation in opposition to the positioning of large companies. This makes it easier for many entrepreneurial ventures to gain traction (it is probably easier to generate initial demand than it was in the past) while at the same time an inflationary pressure of new innovative proposals builds up in large organisations. A tricky challenge for the top of the class.

The CEO of a leading traditional organisation faces the challenge of managing continuous innovation, simulating “lean” models, startup culture, … and at the same time has to feed positive news to the most powerful stakeholders: shareholders, analysts and investors.

A hard job. Nobody said it would be easy, and perhaps it is more difficult now than it was a decade ago.

The leader of an organisation today faces many challenges, and I have wanted to sum up some of them in the following 3 digital dichotomies:

1. Results vs Trends

Are CEOs willing to acknowledge that the relationship with shareholders, analysts and investors should take priority, or should priority go instead to the “tempo” set by trends and by user behaviour? The results of each Q, or attending to the change in user behaviour?

A CEO's job today is closer to the image of having your cake and eating it than to bringing all the elements together in order to have the strategic vision that is needed. I do not envy their position. The complexity of governing the changes that follow one another in less than 12 months makes the challenge of drawing a desirable future situation more and more complicated. Who would have thought that in less than 5 years most of the world's population would have an internet connection in their pockets? And that purchase decisions would be taken from a device of less than 5 inches? And the truth is that the results of those purchases may perhaps not yet be able to convince the quantitative blindness of certain analysts. So a CEO has to split in two: Keep betting on the figures of the traditional business in order to convince analysts and investors, and trust their intuition in order to bet on the digital evolution of their business. Perhaps there is room to bring both quantitative spheres together.

Takeaway: The CEO's job is probably to show each audience what it wants to see. And at the same time to explain the results and their digital component. The problem arises when you do not know how to measure the overall digital contribution to your bottom line. The challenge lies in measuring the involvement of your digital contact surface and its partial contribution to the user's decision-making. Not all purchases are digital, nor are all sales analogue.

2. Just leadership, or Digital Leadership

Who should govern this new environment of change? Can the CEO put all their attention on managing the digital evolution, or should they delegate that responsibility to a new digital leader?

Deciding in times of uncertainty was never easy, and even less so at moments when changes follow one another at dizzying speed. Perhaps the best way to organise such a volume of uncertainty is to appoint a digital strategist and have that figure coexist with the governance of “business as usual” in someone else's hands. Are we not then creating dichotomous organisations? Organisations that have “the digital ones” and “the non-digital ones”. I have always thought that this exercise leaves collateral damage, and perhaps it is the best model for governing in periods of transition.

Takeaway: Perhaps the best option is to define a manager of the transition. A digital leader (CDO, Chief Digital Officer | DTO, Digital Transformation Officer), someone the CEO trusts who determines the route to follow in order to converge towards that desirable future situation. And once the process is over? That is a different story altogether.

3. New roles or new ways of doing things

And should that new digital leader run the value proposition, the distribution model, data intelligence, marketing, the management of its own developments, the control of its results, ...? Does it not amount to creating a parallel structure with digital as its surname? Digital Sales, Digital Marketing, Digital Business Intelligence, Digital IT, Digital Controller, ...?

If solving the question of leadership in the digital evolution is a difficult job —and that is without including whether I should look for that CDO outside or inside the company—, now let us add which areas of responsibility that new digital leader should bring together. In many cases duplicating a new structure with digital responsibilities means a loss of talent. Besides, the search for that talent means generating unnecessary competition between the newcomers and the old hands. If governing the silos of a large organisation is already difficult, add to it the complexity of making old and new talent coexist in an organisation that is in the process of redefining its own culture.

Takeaway: And would it not make sense to generate spaces for collaboration with different leaders per project? We are on a threshold of change between management by departments and management by programmes, by deliverables. Mixing talent and generating collaborative spaces seems the only way. And leaders also have to be defined. And leading does not mean crushing whoever disagrees. I think that digital has uncovered the leadership vacuum of many organisations. And in my judgement leading in environments of uncertainty requires special profiles.

A few months ago, and after watching a TED talk about neuroplasticity, I was making the following reflection out loud:

Things are changing and evidence such as this week's at the conference of the World Economic Forum 2016 in Davos is enough (by the way, the guy behind the tweet is the CEO of SalesForce):

This year 2016 is going to be an exciting year.

This new environment is fun and fortunately there are no answers to every question. And there certainly is a lot of uncertainty. Who said there hasn't always been? Perhaps now it is more visible. The challenge lies in accepting that it is impossible to control the environment -it never was possible- the solution consists of having a vision and having a method in an environment of complete uncertainty.

And there are always open questions left.