What Management Wants From the Changes Brought About by the Digital Era
Natascha van Boetzelaer in an Interview with Stela Campos in Valor Economico (São Paulo, June 2017)
Executives who join companies to lead a digital transformation process are faced with a range of barriers, and may even abandon the project in just a few months. He or she will walk away frustrated and tired of fighting against the tide. The reason for this is that these professionals are hired with the support and incentive of the CEO, but soon find themselves alone.
Even so, experts believe that the power of Chief Digital Officers will grow, and that soon they will be in command of most organizations. Professionals with this kind of profile are rare and often they are fought over, said Natascha von Boetzelaer, the Netherlands professional who heads the digital segment of global executive search firm Egon Zehnder.
Natascha spent several years at the Hong Kong office of Egon Zehnder, and has led a number of digital transformation processes. She believes that CDOs who come from digital companies have a lot to learn from traditional businesses. "They need to understand the culture and not try to implement so fast", she said to Valor, during a recent visit to São Paulo. Below are some sections of the Valor interview.
Valor: How do you know when you should hire a Chief Digital Officer?
Natascha van Boetzelaer: Digital transformation is a topic all over the world. The sense of urgency depends on the industry. Industries closer to consumers are in the hot seat, while at the other end are those industries that are still not feeling any pain, but realize they could be more efficient if they used more technology to optimize their business. While the urgency of change is smaller for them, it is there. The CDO is the agent who leads this transformation.
Valor: What are the essential skills of a Chief Digital Officer?
Natascha: As he or she will spearhead these transformations, he or she must be a strategic executive, with the magnetism and ability to attract digital talents. He/she must also be strong enough to convince the Board that changes must be made. This power is critical. Initially, Digital Directors reported to the CMO or CTO, the key being a connection to the business.
Valor: Where should we look for a CDO?
Natascha: The demand for these professionals exceeds supply. You compete with numerous organizations, because no matter where the professional comes from or where he or she is going, the position they hold is more important than the industry they are in. A bank need not find a CDO necessarily at another bank. What is key is that the CEO be involved, otherwise it is impossible to attract these executives. They will ask a lot of questions and interview the CEO to make sure there is the budget to put together a team, as they know change costs money. The hiring process needs to be agile, and compensation must include long-term incentives.
Valor: Can we define the best profile for a given business?
Natascha: The CEO will almost always want to bring in someone from the digital area at Google, Facebook or Amazon. However, people normally don't want to leave these companies. They know what it means to be digital, but have never led a transformation. Often, they have no respect for the business or the existing systems. A good CDO must be patient and respectful. He or she must use the technology that exists, develop innovative technologies or even work with both simultaneously. Balance is important.
Valor: Why is it that so many digital transformation projects are rejected by businesses?
Natascha: One reason for this is cultural. The CDO has to listen to everyone, be collaborative and strong to communicate the changes and explain he will work with the people, and not against them. They are generally afraid the CDO will destroy everything. Nobody likes change. In retail for instance, if you bring in someone from e-commerce, people will think he or she is trying to steal changes, and the executive will say the company is not prepared for change. People are just trying to protect their jobs. The CDO must evangelize and explain that the more digital the company becomes, the better it will be for everyone.
Valor: But can't the CDO adapt as well?
Natascha: Whoever is not determined and lacks patience will simply leave. The cultural issue is the greatest challenge. A digital transformation takes over two years. It's one thing to hire a CDO, but it's quite another to retain him or her. In many companies, the executive will be so frustrated he or she will leave, feeling the rest of the company is putting up barriers to his effort. Initially the CEO will highlight the importance of the CDO, but will often withdraw his support within a few weeks. If the CEO shows the strategy and provides the company with a vision everyone will follow, so the success of the CDO depends a lot on the CEO.
Valor: In these processes, is it easier if the CDO brings in his/her own team?
Natascha: It's not a matter of simply bringing in digital people and firing others, a mix is necessary. The CDO him/herself does not have to be fully prepared when hired. What this executive must be skilled at is leading transformations; he or she should also have an interesting and relevant background. The executive hired must be curious to learn where consumers are going, and must be resilient, as much of the time will be taken up trying to convince people.
Valor: What is the most common background for a CDO?
Natascha: Most CDOs have a background in math, econometrics, mechanical engineering or statistics. In generally such executives are good at making decisions based on numbers.
Valor: Why would a person with a career at a digital company migrate to one that is more traditional?
Natascha: Because they want to have impact. If the executive goes to a bank for instance, he or she will be able to say he was part of the group that built the "bank of the future". People need a purpose.
Valor: Why do companies fail in digital transformation?
Natascha: Because they are unclear about what digital means for them, or because they hired the wrong person to lead the process. The best CDOs balance short and long-term targets. If he or she works for an international corporation, a common mistake is that digital is rapidly diluted across the organization. If he or she is hired by the head office however, other areas will see how the process contributes to the business, and will want to join. This will allow the CDO to show impact and develop credibility.
Valor: Will CDOs have more and more power in corporations?
Natascha: They say they could be the CEOs of tomorrow. However, I don't think that's what CDOs want. They would rather transform a bank into a future organization than become the CEO. They like what they do, but want to go back to a startup when it's over. If a CDO has a career with a digital company like Amazon for instance, this executive will be well aware of how specialized he or she is, and if he/she wants to develop in different roles and learn how to lead transformations, a good decision is to migrate to a traditional company, no matter how difficult this may appear.
Full article: by Stela Campos: “O que querem os gestores das mudanças da era digital“ in Valor Econômico (10 July 2017).