Every leader plays on the digital team
It’s tempting to think of digital as distinct and separable into specialist enclaves. All organizations have a deep-seated bias toward perpetuating business as usual and repelling forces that try to change conventional and well-honed best practices. Here’s how three C-level roles must play together to win at digital.
Chief executive officer
Digital business change can quickly alter the fundamentals of the business, including what customers want, what the product can be, what the industry is, and what the company structure and mission should be. These are matters that only the CEO can deal with, in conjunction with the board of directors, investors, executive team, customers and other major stakeholders.
If the CEO does not own and drive the biggest and hardest decisions, then change will be superficial and weak.
Leading from the front is essential. “If the CEO does not own and drive the biggest and hardest decisions, then change will be superficial and weak,” Mr. Raskino said. Digital business cannot be delegated, and it will not resolve itself.
Chief financial officer
The company’s CFO must adapt the financial model to the new cash flows that digital brings. Factors like balance sheet structure, capital investment profile, free cash flow, revenue recognition timing, gross operating margins and tax optimizing methods can change radically when digital disruption occurs. As Mr. Waller said, “The thing you are monetizing and the way you do it will often change, too, for example, from a product sale to a service subscription or an intellectual property licensing fee. Only the CFO can make these changes and judge how to time them.”
Chief operating officer
The COO will have to lead the transformation to new operating models, or perhaps change the nature of what he or she is operating. New competencies will need to be incubated for 3D printing, cloud-based services or digitally enabled products, and these new areas will need to find a home on the organization chart. Existing areas will feel threatened, so dealing with active and passive resistance will become a key leadership issue for the COO.
Play the same game
All leaders must be involved in the same digital sport. As Mr. Raskino said, “R&D can’t beta test digital products that Legal isn’t ready to sign off on. Sales can’t confidently sell online services that IT can’t quickly evolve and properly maintain, and the CEO can’t promise customers a bright new tomorrow if the team can’t deliver. Importantly, the board can’t convince investors to stay loyal if the company looks like it’s on the victim list in the next wave of industry disruption.”