A CMO, a CIO, and a chief digital officer walk into a bar…

Chief Digital Officer Sweet Spot

The CMO asks for a drink. The bartender says, “Hmm, no, sorry, from the look of you, I don’t think you know how to hold your liquor.”

The CIO asks for a drink. The bartender replies, “I know you know how to drink, but sorry, you haven’t paid off your tab from all those drinks you bought over the past 10 years.”

The chief digital officer approaches the bar, but before he can ask, the bartender reaches over and high-fives him. “My main man,” he greets him enthusiastically. “What do you want? It’s on the house!”

Any resemblance that bartender has to a CEO (or CFO) you might know is purely, well, intentional. I know, it’s a silly little parable. But there’s more than a grain of truth in it for many organizations.

There’s been a resurgence of popularity for the role of a Chief Digital Officer (CDO) lately. Last fall, Gartner made the prediction that 25% of organizations will have a CDO by 2015. And that’s shaking up the corporate technology power structure in uncomfortable ways for many CIOs — and I suspect for some CMOs too.

“The Chief Digital Officer will prove to be the most exciting strategic role in the decade ahead,” predicts Gartner VP David Willis. “The Chief Digital Officer plays in the place where the enterprise meets the customer, where the revenue is generated, and the mission accomplished. They’re in charge of digital business strategy.”

In some firms, the CDO is essentially in charge of the online business unit, the e-commerce portion of the business. Russell Reynolds Associates, in their epic article on The Rise of the Chief Digital Officer, notes that in retail and leisure sectors, such digital businesses are the fastest growing revenue stream. At media companies, struggling to survive in a world that has redefined media, CDOs are the star-crossed warriors charged with building the digital properties and supporting business models on which their future depends.

These scenarios make a lot of sense as business units.

But the role and reach of the CDO seems to be evolving as rapidly as everything else related to the digital sphere — it’s actually quite hard to find something that isn’t related to digital in some way these days. CDOs are appearing in companies, not as explicit business unit owners, but as hybrid marketing-technology change agents at the right hand of the CEO.

For instance, that Russell Reynolds article actually begins by stating (emphasis added is mine): “The challenges and opportunities for businesses in this digital age are enormous. Companies need to be fleet-footed to keep pace with changing technology and consumer behavior. Business strategies now must be seamlessly interwoven with ever-expanding digital strategies that address not only the web but also mobile, social, local and whatever innovation there may be around the corner.”

That kind of sounds like, well, everything. Except maybe janitorial services?

The CIO is feeling the heat

Because all things digital are powered under the hood by technology, the executive who has perhaps felt the most immediate pressure from the rise of the CDO is the CIO.

Peter Hinssen captured the situation quite viscerally in his provocative — provocative in the way one might provoke a tiger with a sharp stick — article on Business Insider earlier this month, IT Departments Have Become Completely Useless. (Don’t pull any punches, Peter.)

“Who is that dashing corporate person that deals with all things digital and social?” he writes breathlessly. “Why, it’s the CDO! Who is that person who tackles the strategic questions on big data and analytics innovation? Why, it’s the CDO! This next-gen IT hero is the one who really understands digital as a means of innovating the company.”

Some believe that the CIO will morph into the CDO. But according to Peter Hinssen, “Many Chief Digital Officers in companies do NOT have an IT background. They come from such well-reputed corporate regions as marketing, business development, or sales. From anywhere but IT, actually.”

The barriers are two-fold.

First, the kinds of technology that CIOs have had the most expertise with are generally back-office in nature. In many companies, they’ve been ill-positioned to champion more front-office technical innovations, either due to cost or security concerns or because it fell outside their comfort zone or the capabilities of their staff. As I wrote in an article some time ago — why marketing and IT are diametrically opposeda significant part of this barrier is the structural incentives around which IT was intentionally chartered.

Second, a number of CIOs seem to be pigeonholed by the C-suite more as technical leaders than general business leaders. And now that CEOs are seeking a change agent to transform their enterprises into the digital age — in many circumstances, a “turnaround” kind of mission — the CIO may not be viewed as the right kind of leader for that job.

CIO.com recently published an article Do Chief Digitial Officers Spell Trouble for CIOs? Their short answer was yes. In many cases, “the CDO is an executive from outside the company — and outside IT — who parachutes in at the behest of a CEO who is adamant about corporate transformation. Usually reporting to the CEO, the CDO gets the authority to rearrange staff and request funding to launch big plans.”

Dave Aron of Gartner calls that a “vote of no confidence” in the CIO.

To be sure, many CIOs would like the CDO job. Gartner estimates that about 20% of CIOs have already taken on those responsibilities. And they sound quite optimistic about the opportunities for CIOs who step up to the challenge. But CIOs are Gartner’s bread-and-butter customers. Peter’s candid editorial suggests that may be a hard step to climb.

But what about the CMO?

Yet surprisingly, I haven’t heard as many concerns raised by the CMO community: how does a CDO who reports to the CEO, and the not the CMO, affect their position in the enterprise leadership Pantheon?

Sure, the CDO is independently wielding technology to accomplish his or her mission — what makes the CIO nervous. But that’s merely a means to an end. The mission of the CDO is to understand and connect with the organization’s modern customer and to take charge of crafting the experience those customers receive. This is especially true in organizations where the CDO role is broader than a specific business unit.

Where does that leave the CMO? Overseeing the sundowning of traditional marketing channels to a winnowing number of non-digital customers? Doing “branding” — not the modern kind of brand-as-experience, but old school logos and taglines validated by focus groups? Handling “PR” — not the modern kind of everything-social-is-PR (and pretty much everything is social), but old school news releases and press conferences?

I’m exaggerating to make a point, but in a C-suite that has a strong CDO and a digitally inexperienced CMO, that may not be too far off the mark. The CMO might start to feel like that poor wretch in Office Space who keeps having his desk moved to smaller cubicles in darker corners of the building. Next to go is his stapler.

What is marketing’s purpose if not to understand and connect with the customer?

I fully appreciate that understanding and connecting with modern customers is more complex than ever and requires enormous changes to what we’ve called “marketing” in the past. I sympathize with more traditional marketing leaders who have had a veritable tidal wave of changes crash upon them with a velocity that is nothing short of dizzying. This is an epic challenge.

But that doesn’t change marketing’s responsibility. If you carve out all things digital from marketing — in a world that is asymptotically approaching all things being digital — and give it to a CDO who’s independent of the CMO, then the CMO has lost that responsibility. And with great responsibility goes great power.

If I were a CMO, I would be as nervous about a direct-to-the-CEO CDO as the CIO. (On the bright side, previously distant CMOs and CIOs might finally have something in common — and more reason than ever to go get a beer together.)

Is there a better solution?

Yes! Marketing should own digital. Because digital is inherent in understanding and connecting with the modern customer. And regardless of whatever C-level role wins this responsibility, understanding and connecting with the modern customer is marketing.

The ideal scenario, I believe, is for the CMO to preempt a digital coup and hire a CDO as his or her right hand with the urgent mission of collaboratively absorbing all things digital into the very definition of a unified modern marketing department. This role may be more like a chief marketing technologist — or the CDO may have a chief marketing technologist as their right hand for the more technical facets of that transformation.

But the technology is simply a means to an end. The vision is that understanding and connecting with customers is fully unified under marketing’s umbrella.

After all, there still are non-digital aspects of understanding and connecting with customers in most businesses. But to customers, the lines between digital and non-digital are nearly invisible. They simply expect continuity in their experience with you.

Only a truly unified marketing department can deliver that experience.

Change agents, team players, and the post-digital era

Of course, ideal scenarios and reality don’t always match.

It may be that in entrenched, large-scale organizations, the overhaul of marketing from within may be too hard to execute in the timeframe that the market is demanding digital mastery. It may be that the CMO — as brilliant as he or she is in their own ways — is just not up for the challenge of having to lead that transformation and to hire and deftly manage a powerhouse CDO (or multiple digital and marketing technology leaders).

In which case, if I were the CEO, I’d hire a CDO and make them my agent of change.

Now, in practice, I don’t believe that digital has to be a one-chief-to-rule-them-all battle for corporate dominance. In fact, cooperation between all the heads of the business is more necessary than ever in a world where, literally, everything is connected. If there’s a CMO, a CIO, and a CDO, they should — they must — find ways to work together in the best interest of customers and the business. Such collaborations can be not merely congenial, but inspiring and immensely effective.

But in the fluid battlefield of modern markets, there is also great value to having individual leaders with undisputed authority to make swift decisions. If too much of tactical execution requires consensus from a committee, it’s going to be a drag on the firm’s competitiveness. Nimbler competitors will outmaneuver them.

When it comes to understanding and connecting with the modern customer, that leader can be the CMO or the CDO — but it’s harder for it to be both.

Eventually, either the CDO reports to the CMO (probably, I’m afraid, a new CMO by that time) or the CDO becomes the CMO. At which point, the firm will have successfully completed its transformation and entered what David Cooperstein of Forrester calls the post-digital era: digital, business, and marketing are all one in the same.

In fact, if a company doesn’t recombine them, something is seriously wrong.

“I see nothing wrong with hiring a chief digital officer to accelerate growth in the digital space,” said Tarik Sedky, CDO of agency Young & Rubicam from 2007-2010, an an Adweek article from 2011, Chief Digital Officer Title Won’t Die. “I think the real problem is having a chief digital officer for more than three years.”

Where will CDOs go after their positions are assimilated into fully transformed firms?

Some may indeed become the new CMO. For others, the Russell Reynolds article concludes, “CDOs who demonstrate their ability to manage change and transform their businesses almost certainly will lead the way in the rise of the Digital CEO.”

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Comments

  1. Today’s CMO should represent and be well versed on all aspects of the marketing mix and that obviously includes digital. If we have a CDO (Chief Digital Officer) should we therefore have a CTVO (Chief TV Officer), a CRO (Chief Radio Officer) etc., etc. ?? That seems unwarranted, The brands that are ‘winning’ are the ones taking a holistic view of all marketing channels, not siloi-ing them. The role of today’s CMO should reflect that.

    • I’m in complete agreement that, ideally, “digital” should be a seamless part of marketing today, not a silo.

      That being said, if the choice is no digital/bad digital vs. silo’s-but-not-ideal digital, I can see how an organization may hire a CDO as a change agent. And I’ll acknowledge that “digital” is more complex than simply a shift in media, such as radio or TV. But I tend to agree with Tarik Sedky that such a position should be a transitionary role with the ultimate goal of unifying the company for a post-digital age.

      • I completely concur with your view here Scott.

        A number of years ago I was a big proponent of the view that digital should be a fully integrated part of a marketeers role, and still believe that’s the paradigm we should aim for. However, experience in trying to implement this approach (bottom up) just led to an unresponsive environment with slow growth and lower quality results.

  2. Great thought Scott, it only gets interesting from here :). Honestly though, I am finding it difficult to digest the new conceived notion of a CDO, in a lot of ways I think this is yet another “title” that Gartner threw out and is doing the rounds — at the end of the day we are still trying to solve the broader Marketing Technology problem and filling the gap between Marketing & Technology. Of course based on the organizational models, there may be 5 “C” level folks and they continue to slice their focus areas for instance the CMO – CDO collaboration here. Difficult to envision a modern CMO going back to an isolated focus on more traditional media. I also feel having too many layers is a step back when there is a stronger need for a more integrated marketing planning across offline & digital as well as across the traditional marketing channels and sales/trade initiatives including e-commerce. For me, whether we call the function a CDO or CMT, whether it reports to the CEO or the CMO, they re trying to solve the same challenge and recognizing the fact that Marketing & Technology cannot be isolated anymore to deliver the most optimized consumer experience.

    • Thanks, Mayur.

      I think you’re right that too many titles out here muddies the already muddy water of who’s doing what. Far better to focus on what the business needs, collectively, to accomplish its mission, and then seek the structure that best optimizes those objectives. At the end of the day, the titles don’t matter — the outcomes do.

      That being said, I am partial towards a chief marketing technologist. ;-)

  3. Love this post Scott. I think it perfectly highlights the transformation within large organizations at the highest level. A couple of thoughts:

    There is a lot of talk about the CMO – CIO relationship and frankly the relationships between all C-level execs as a huge emphasis for companies who want to shoot ahead. We (IDC’s CMO Advisory) have talked to some folks who have a VP of Sales Enablement who report up to the CIO, CMO, and Head of Sales and have also started seeing some organizations that the CIO report directly into the CMO. Both of these structures help bridge the gap between the different departments and can help accomplish much of what a CDO might be tasked with.

    I also agree that if I’m CMO and a CDO gets brought in I might get nervous. The “new” CMO must know data and must embrace digital. In fact in large B2B organizations we’ve seen digital programs grow from ~12-13% of the mix to close to %30 of the mix in the last 4 years. If I’m CMO I don’t want to lose or share this budget, in fact, digital might the best tool to prove ROI and get an even bigger seat at the Executive table.

    Ultimately not matter the title it will be difficult to do it all alone, so regardless the title it behooves all to (try) and work together. Great post and awesome topic.

    Sam

    • Thanks Sam — I greatly appreciate you sharing some of the perspective you’ve seen in your research.

      The VP of Sales Enablement is a great idea. I know that sales enablement has become a real challenge for many B2B companies in this era where the lines between marketing and sales are increasingly blurry. Definitely interesting to have that role act as the coordinating device between marketing, sales, and IT.

      When I was at the Marketing Operations Executive Summit last week, that was one of the arguments made in favor a VP of Marketing Operations — kind of a “chief of staff” to the CMO. The nature of marketing operations crosses many silos in marketing (and arguably well into sales enablement too).

      It’s simply fascinating to me how many different ways there are to slice this apple.

      • I agree with it being fascinating how many ways you can slice it.

        I think that’s an important thing for executives to remember on many of these “transformations”. There is no right answer, each company is at a different spot and has different intricacies, but you _must_ do something.

        Sam

  4. you should expand more and have a 3 circle ven diagram: Marketing (Brand promise and aspirations) – Technology (capabilities and availability) – Consumers (wants and needs) and than it is indeed clear that the pivotal role that needs to be played in all of future companies is the CDO :-).

    • I was about to start fretting that Venn diagrams can only represent 3 dimensions. But it turns out that’s only if we restrict the elements of the diagram to being circles. If we move to ellipses, we can actually represent 5 dimensions, as shown in this example:

      http://micromath.wordpress.com/2011/07/04/why-are-venn-diagrams-useful/

      So now we can have the intersection of marketing, technology, sales, customers, and finance? Should help clarify? Or maybe not? :-)

      • why add sales and finance. You have :

        1. Technology: what technology is available
        2. Brand promise and proposition : you cold argue that we need to add product here, but i believe that the concept of products comes out the brand promise and proposition.
        3. Customers needs and wants:

        it is in the vendiagram the sweetspot of those three elements that make out the role of Chief digital officer. He is the one translating the wants to brand and using the overlapping available technology to make sure the message lands with the needs of customers.

        I feel that the current way you describe this is too much internally focussed and is missing the point that in a way it is the consumer who dictates what technology is best used. Example from telco industry: MMS.

        Technology was there, marketing was coming up with great product propositions around MMS, but consumers did not want this .. conclusion: this was only looking at the overlap between marketing (product proposition) and technology and was missing out on the consumer overlay

        • Sorry, Toon — my remark about the 5-dimensional Venn diagram was just my dry sense of humor. On a serious note, I agree with your emphasis on brand, technology, and customer.

  5. This might be the required bridge function to bring the CIO and CMO on one plan; supporting the organisation to engage digitally with their customers …

  6. MariaRMcDavis says:

    In response to earlier discussions… The problem with assuming CMO’s should be versed in digital is that digital strategy requires an extensive understanding of technology, customer insights, data–not to mention how insights are collected, how they are used and so forth. Smart CMO’s noticed this trend a few years ago (if not before) and adapted accordingly. I work with CMO’s who could easily step into this role, because they did not fight it–they became evangelists for the intersection of technology/IT and marketing. This is a great article and discussion!

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