Month: October 2019

Organizing for Digital Acceleration: Making a Two-Speed IT Operating Model Work

| Charlie Ranalli

McKinsey has long argued that delivering an enriched customer experience requires a new digital architecture running alongside legacy systems.

Furthermore, by adopting a digital product management model, companies can get the most from their IT architectures and deliver innovative online customer experiences faster.

A digital product management approach requires that companies systematically incorporate customers’ needs and insights into their products and services. Teams are held accountable for implementing specific improvements to digital products or digital experiences. Other groups, such as marketing, logistics, and customer service, may be collaborators, but ultimately digital product managers are measured on outcomes associated with the revised product or experience

Oliver Bossert, Martin Harrysson and Roger Roberts
Organizing for digital acceleration: Making a two-speed IT operating model work
McKinsey Insights, October 2015

Smart Strategies Require Smarter KPIs

| Charlie Ranalli

Following-up on his 2018 article and self-assessment tool, Michael Schrage, a research fellow at the MIT Sloan School’s Initiative on the Digital Economy, explores how digital leaders are transforming the strategic role and purpose of key performance indicators.

Their research shows digitally sophisticated organizations have flipped traditional KPI purpose and processes inside out. Instead of seeing KPIs primarily as analytic outputs for humans, leading organizations increasingly use them as inputs for machines. Leaders rely on KPIs to train, tune, and optimize machine learning models for business impact.

Michael Schrage, “Smart Strategies Require Smarter KPIs“
MIT Sloan Management Review, September 2019

Do you need a Chief Digital Officer?

| Charlie Ranalli

One of the hottest topics CEOs face when tuning their leadership teams to embark in a Digital Transformation is deciding if they need a Chief Digital Officer. They do.

These are the four reasons why.

One: responsibilities

The Digital leader is concerned with strategy and models, change management, digital business outcome and supporting the rest of the business leaders develop their digital skills and agendas. She or he is the “sherpa” facilitating the development of the roadmap and nudging the transformation, understands technology profoundly but does not have to be a technical expert.

The IT lead executive on the other side delivers on technical stuff, itself a gargantuan effort – more on this later. The two must form a strong and fluid partnership since their success is mutually dependent, their agendas are complementary but different.

Two: priorities and bandwidth

Seasoned executives know that mixing workloads that have aggressive real-time demands with forward-looking pioneering work on the same individual(s) usually leads to the present mortgaging the future. In Sales it is one of the guiding principles in organization design and priority management: once a leader, team or individual executive has enough “existing” customers, growth will suffer, it is crucial to either reshuffle responsibilities or add people.

The same happens here. The CIO will usually be tasked with managing delivery and operational workloads, inevitably sacrificing time needed to research and strategize if also asked to lead innovation. The CDO has a lighter operational burden and demand-driven disruptions, and can focus on imagining, planning and building the future.

Note that the CDO must be responsible for outcomes and show results but is a lot less concerned with the day to day operational demands of the IT infraestructure.

Three: profile and dynamics

The CDO is a networker, both internally and externally. Innovation and change require a huge investment of time during the envisioning, planning or implementation phases of new initiatives. It can be selling ideas, coordinating or troubleshooting, and while structure and focus are essential to get results over time, a lot of the actual hands-on time is unscripted and unstructured.

The CIO on the other side lives in a significantly more systematized and process-driven environment required by project delivery, operations, support and security.

This requires each executive to have a specific profile – or at least wearing the right “hat” for the demands of the job since smart, experienced individuals could conceivable adjust their style as needed – but will be challenged to do both simultaneously.

Four: an additional voice

Another advantage is bringing other technically competent individual to the leadership team. Although the role is not as technical as the CIO, the CDO will have enough technical know-how to present alternative ideas and views, challenge assumptions and enrich the debate along the way.

This of course requires good planning and decision-making habits, idea curation, and a bit of conflict management. But openness to consider a wide spectrum of possibilities, have heated debates and experiment with different approaches is a desirable attribute in a digital leadership team.

Size Matters

The size of the business has a counterintuitive impact in the need to create the CDO role. Instinctively, the larger the business the more important it should be. Not so fast.

Here is other side of this story: larger businesses have larger IT organizations, giving the CIO more flexibility to delegate day-to-day operational duties, redeploy a % of the staff to innovation initiatives, and therefore reinventing the position as a hybrid CIO/CDO role. This is particularly true if the company is advanced migrating systems to the cloud – freeing resources and budget from legacy on-premises jobs.

Smaller IT organization however will have a smaller or more junior team reporting to the CIO, making it more challenging to redefine and expand the position, or redeploy resources further down the IT organization.

One solution does not fit all

In the end, this is a case-by-case discussion that must consider several factors – but most of the time separating the roles will be the preferred approach, with far more upsides than downsides.