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The chief digital officer part 1 – the why, the what, the how

Joachim Heinz

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As the world becomes a digitally connected place, the impact on business is huge. As businesses are not partly affected but as a whole, there needs to be a clear responsibility for the necessary transformatinonal efforts. This blog post outlines, why businesses are in need for a chief digital officer. In a following series of blog posts, I will explain his tasks and responsibilities and finally give and idea how to organize this role inside companies.

In the first blog post, I will focus on the need for such a role in the C-suite.

Understanding digital impact on business

world netAbout 200 years ago, people and busineses laughed about the first steam machines. But step by step it became clear that steam machines can do some work cheaper and more efficient. It was the dawn of a new era that transformed business as well as society – it was the begin of the industrial revolution. Today nobody will neglect this very clear observation.

Today, we can see many new steam machines. A global internet connecting people, information and hardware. Smartphones with insane technology. Mobile networks with data speed beyond land line connections. CPUs double their speed every two years. These are not one steam machine. Today, a dozen of transform-class technologies are on the way to shape our landscape of life and business. And all those technologies come simultaneously.

Those technologies already transform societies and markets and well – customers. 10 years ago customers had no chance to make enough pressure on business regarding product wishes – today customers can bypass businesses by crowdfunding their own idea and select for a business partner. Markets are being reshaped in no time – airbnb did not invent to rent a bed, but they reinvented the way how to rent a bed. Uber did not invent the taxi-service. They reshape how this business is done powered by digital technology.

Those technologies will grow into every part of our business life because there is a simple but true paradigm: “everything that can be digitized will be digitized“. And that is even true for the core of every company. Digitalization even affects your business model.  Beyond that, with digital technologies it is even possible to create new business models. Not convinced yet? Then investigate on Amazon kindle, Apple itunes, Paypal and so on. Even the producing industry is not in a save place. Todays megatrend in the industry is called industry 4.0 which deals with connectivity between machines, workpieces and humans.

Beyond all business-model views, your workforce is currently being transformed, too. Just in that second. Or do you think that their usage of Whatsapp, Weibo, Wechat, Facebook and many other digital tools does not affect them? Sure, it does affect them very much. To make the picture complete, younger generations who now enter business seeking for a new sense in their work. Just giving them a target and say “go!” make them only leave your company.

So here is the summary of why your company needs a chief digital officer: Digitalization will come to your business model. And if not you do that, another company will do. So here is the big task: You have to transform your company to meet the needs of digitally enhanced or even purely digital business models. Therefore you need a strategy first. But don´t forget a very valid sentence from Mr. Drucker: “Culture eats strategy for breakfast”.

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Building strategy, enhance the business model, develop the company culture – seems to be a CEO-job, doesn´t it? OK but there is a big challenge. As the transformation ahead is based on digital technology, you need to have a deep understanding of technology and the intersection with humans, culture and strategy. And this is not a part-time job. This is why I call the Chief Digital Officer into the C-suite.

In my next blog-post in this series, I will dive into the “what” of the Chief Digital Officer and give a frame to his responsibilities and tasks.

 

The death of the classic org chart: How the connected world transforms your current company setup

Joachim Heinz

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children on playgroundWithout any doubt, the world gets a hyperconnected place – a global network, exchanging more information and data every day. Step by step, “everything” gets connected by the global network, empowering new business models and transforming customers and markets.

Observed from a very high perspective this means that customers and markets become something like a brain – a huge network with small and big hubs. A network that is able to adapt to trends very fast and absorb new ideas and behaviors quickly. A network which generates more innovation faster and faster. A network which creates more disruptive power than ever a change before was able to.

The newspapers are full of those “disruptive news”. Think of Nokia: In 2007, Apple presented the iPhone. In 2014, Nokia was sold to Microsoft. Think of the book-stores: The e-book ecosystem was launched only a few years before – now a whole business area is in trouble. And the current big thing is 3D-printing: Think of service trucks, equipped with a 3D-printer to deliver spare parts on demand. This is why logistic companies get nervous. Powered by the network scaling effects of the Internet, young and small start-ups suddenly are able to crush existing business-models in no time.

Same change appears by having a look on the customers and markets. The modern customer is equipped with a smart-phone and socially connected, using networks for spreading news and information with his peers world-wide. The connected customer lives in that brain.

And with this existing connected customer and the new business models, which are part of a global brain, the problem for your company gets visible as one big question: Are you ready for being a part of the brain?

Trying to answer this question, let´s have a look on the very core of every company: The org chart (hopefully the result of the running business model). And in 99,999% of all companies I bet the org chart looks like this:

OrgChart_ClassicThis kind of structure is a great thing, isn´t it? It looks like things are clear: clear tasks, clear setup. Built for yesterdays business models. And the org chart is run by a huge set of rules, people running functions, seen as resources and led by managers, not leaders.

Well this setup was right for yesterday – in the pre-Internet time, as market and customer behavior was clear and “slower”. But today, we have connected customers who ask for innovation faster and faster, and markets changing with the speed of light.

So, is an org chart with all the constraints as we all know still the best idea? How long does it need to restructure parts of the classic org chart trying to adapt to the upspeeding markets? One year? Two years? And where are your customers and your markets then? So here we are: The death of the classic org chart because it represents yesterdays world.

Let´s come back to the connected world. Well if the world behaves more and more like a giant brain, your company should do that, too. Act like a network. Flexible. Fast. Adaptive. Responsive. So let´s forget the “chart” thing, because a chart only shows the current state. But we already learned that we do not need another “fixed chart” that cannot be changed fast enough to match the customers` requirements.

We need something like a “dynamic org map” that does not show a current state of the business organization, but gives an overview of how to deal with a customer and where to get support and services to fulfill the customer needs.

What enables the dynamic org map to gain speed and stay flexible like a brain?

  • The teams in the dynamic map are able to decide.
  • There is an underlying strategy for the teams and a set of few guidelines.
  • Customer orientation is the prerequisite for the entire company.

For sure, this dynamic map puts most companies on the head. But if they do not do this on their own, the markets will do. And in the second case, it might not have a good end.

As the world becomes something like a brain, the only logic step for companies is to transform into a brain node, constantly fed by external information and built-in ability of adaption of their business models.

There are a few best practices I have discovered so far. One of them is the Haier company. In 2005 the CEO decided to go an entirely new way of setting up the company: Putting customer satisfaction and interaction in the core of his strategy. In my words: The CEO was looking for the closest connection to the global brain. So he threw away his classic pyramidal org chart and build a company based on dynamic teams. Here is more of this stuff.

Staying in the current company setup has of course a target, too: Your company will end up as a dinosaur – being a part of tomorrow: In the museum of organizational structures for slow-moving industrial markets of the past.

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