New Study Indicates CMOs May Be More Successful At Leading Digital Transformation Than CDOs – Forbes

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Transformation is more likely to succeed with CMO cross-functional leadership

According to a new study published by SAP Center for Business Insights conducted in collaboration with Oxford Economics, the common approach of hiring chief digital officers (CDO) may not be the secret to implementing successful digital transformation initiatives. The report examined the difference between leading companies who had successfully implemented a cross-function digital transformation project from others who had yet to complete one. The leaders were reaping the benefits of their transformation initiatives by being more profitable and growing faster than their peers. But what drove the difference in the outcomes?

Vivek Bapat, SVP of Marketing Strategy and Thought Leadership for SAP shed some light on the findings. “The first thread was that the leaders looked at [digital transformation] as not another IT project so they didn’t just relegate it to the IT department. They looked at it as true transformation, as a way of changing the way that they did business. The second thread was that they almost exclusively began with transforming the customer-facing functions first. This goes to show you that the mindset was not in the old world of ERP which was about operational efficiency. The mindset was about the customer. The third one was the recognition that there was an enormous amount of upscaling and retraining that needed to happen. They needed to bring in people with new digital skills to fundamentally change the talent mix within the company. We call it the virtuous cycle of talent, which is the fact that these companies were able to demonstrate to the market that they were investing in digital, they were able to pull in better people and that ultimately made them even better at digital.”

“The last piece of it was where were and how they were investing in technology. We saw two clear patterns. The leaders were three time more likely than the other 97% to invest in IoT and analytics and seven times more likely to invest in machine learning and AI technologies. They were really progressive in these types of technologies compared to the rest.” concluded Bapat.

While organizing and leading the transformation initiatives varied among the leaders, there were some commonalities. Bapat explained, “There was no single [organization] answer. There was no conclusive evidence that it has to be led by business or it has to be led by IT. In many cases the role of the CMO was very, very important. Because of the customer-facing functions, we saw that the CMOs were the driving force in the transformation and it really stood out in terms of the numbers. So the CMO became a central figure, and that was true for not just retail or consumer companies. That was true for all industries.”

Cross-functional orientation also proved to be important to successful transformation. According to Bapat, “We found was that the organizational set up for the successful ones was cross-functional in nature.  Often where it didn’t quite work out,  the CEO basically just hired a chief digital officer and said, ‘You go do it.’ So that was not necessarily the model. The prevailing thought, at least in the last couple of years, was for companies to appoint chief digital officers to do the transformation. But we didn’t find that evidence that that was a successful model. We saw the cross-functional organization as a better setup.”

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