Tag Archives: cdo

Why You Need a Digital Leader

Nineteen percent of the world’s top 2,500 companies have appointed an executive, commonly known as a chief digital officer (CDO), to oversee the digital transformation of their business, according to the results of a new study about the role from Strategy&, PwC’s strategy consulting business.

Though this number might seem modest, it more than tripled last year’s figure, of only 6%. Sixty percent of the digital leaders identified in our most recent study have been hired within the past two years.

Strategy&’s 2016 Chief Digital Officer Study looks at the top 2,500 public companies around the world by market capitalization to better understand how many companies have appointed a digital leader, who they are and where the position fits into companies’ hierarchies. For the purposes of this study, the CDO is defined as that executive, no matter the title, who has been given the task of putting into practice the digital mission of his or her company or business unit.

See also: The Dawn of Digital Reinsurance  

In light of the significant increase in digital leaders across industry, company size and region, companies would do well to start believing the hype around the new position.

  • Companies in the financial services and consumer-focused industries have the highest digital leader ratio. According to our study, 35% of insurance companies have digital leaders, and 27% of both banking and consumer products companies do, as well.
  • European companies are hiring CDOs at faster rates than companies elsewhere (38% in Europe vs. 23% in North America, 13% in South and Latin America and 7% in Asia-Pacific).
  • Larger companies continue to remain ahead of the curve in appointing digital leaders. The percentage of companies with CDOs by market cap peaks at 33% for Quartile 4, then decreases to 18% for Quartile 3, 15% for Quartile 2 and 10% for Quartile 1.

Creating a unified vision for digital

“For a growing number of companies, it’s just not feasible any longer to spread out various digital efforts among separate business units,” says Pierre Peladeau, a leading digital practitioner and study co-author with Strategy&, partner with PwC France. “It may work during early stages of digitalization, but as a company moves toward a more advanced stage of digital maturity, a unified approach is needed to execute a more comprehensive digital strategy.”

Taking the helm of a holistic digital strategy means different things for different companies. While some look externally for digital leaders, others engage existing leadership and a diverse group of stakeholders to help manage the transition. For these reasons, digital executives come in various forms, with a variety of different skills in tow. While marketing and sales-backed leaders dominated last year (34% and 17%, respectively), this year 32% of digital leaders bring technology backgrounds to the job, up from 14%.

“One of the most daunting challenges for any digital leader is how to develop new digital applications at the same time as they’re dealing with legacy IT systems that have been vital to a company’s operation for years,” says Mathias Herzog, Strategy& co-author and partner with PwC US. “As this becomes more and more apparent, we should continue to see a growing number of executives with the technical expertise necessary to navigate a company’s multi-faceted digital assets.”

Knowing how to work within these constraints while simultaneously maintaining the operational agility needed to move digitalization efforts forward will be key for any incumbent digital leader.

See also: It’s Time to Accelerate Digital Change  

“The CDO’s role, by definition, is transformational,” says Olaf Acker, co-author and Digital Services leader with PwC Strategy& Germany. “Which means anyone assuming the role has to balance the old technologies with the new, technical expertise with an understanding of internal organizational mechanisms and a vision for a company’s future that also aligns with its longstanding mission.”

Methodology

Strategy& examined the global top 2,500 listed companies by market capitalization as of July 1, 2016, as defined by Bloomberg.

For more information, please visit www.strategyand.pwc.com/cdostudy. A copy of the study and breakdowns by industry, company size and geography are also available from the media contact.

How to Avoid Being Bit by GDPR (Part 2)

This is Part Two of a two-part series focused on helping data insight leaders plan for GDPR. Find the first part here

With the EU-approved General Data Protection Regulation (GDPR) set to be implemented in the U.K. on May 25, 2018, GDPR must be a consideration for all insight leaders.

In the first post, we focused on needing to check your potential exposure with regard to these topics:

  • Higher standard of what constitutes consent;
  • Challenges if using “legitimate interest” basis;
  • Permission needed for profiling and implications; and
  • Data impact of people’s right to be forgotten.

Is there more to GDPR than that?

I mentioned in my first post that I was concerned about an apparent complacency regarding GDPR readiness. After talking further about this with some leaders, I believe that one cause is risk and compliance teams advising that GDPR isn’t as bad as feared. This means there’s a danger of potential threats “falling between two stools.”

Let me explain.

From a risk-and-compliance perspective, many of the principles in GDPR aren’t hugely different from the existing U.K. Data Protection Act. Many of the changes come through greater evidence requirements and more specific guidance regarding what is expected in specific situations. For that reason, I can understand compliance experts not seeing the need for vastly different paperwork. However, leaving such an assessment to that team risks missing critical implications.

One of the reasons that insight leaders and data teams should get involved in discussions about GDPR is to spot technical/data/system implications of change. What may seem to be simply a clarification of language to a compliance expert sometimes has far-reaching implications for company data models and how data will be used or stored — for instance, the rights mentioned in Part One with regard to withdrawing permission for profiling (or the “right to be forgotten”). Most businesses’ existing data models will not currently cater to the new fields, and separation of records is required.

So, although wading through EU legal language may not sound like a fun day out, it’s worth data insight leaders and their teams talking through practical implications with their risk and compliance advisers.

Here are some other considerations for you to discuss.

Data model impacts from GDPR

The reason for titling this topic “Data model impacts” rather than “Database impacts” is our advice to maintain up-to-date data models for your business that give you independence from specific IT solutions. Whatever this is called, data insight leaders will want to identify any impacts to their data structures and any changes that may be needed to enable compliance ASAP.

See also: Missed Opportunity for Customer Insight

In our first post, we touched on both the need for consent (to marketing and profiling) as well as the need for evidence of this. There are further considerations.

Applying meaningful data-retention policies that can be justified as reasonable requires knowing the recency of such consent. In addition, data-controller responsibilities require the capturing and storage of consent data within any third-party sources of personal data.

Even the current Information Commissioners Office (ICO) guidance (before it was updated for GDPR) makes clear:

  • “Organizations should therefore make sure they keep clear records of exactly what someone has consented to.”
  • “Organizations may be asked to produce their records…”
  • “Organizations should decide how long is reasonable to continue to use their own data and more importantly a third party list.”
  • “As a general rule… it does not rely on any indirect consent given more than six months ago.”

Do your data models capture that granularity of data permission (what and when) and hold it against both internally captured personal data and any you may have purchased from third parties?

Data Protection Impact Assessments (DPIAs)

Data and analytics leaders within businesses often complain to me about not being consulted by internal project teams. It seems all too often the data implications of projects (especially on downstream systems like data warehouses) aren’t considered or are de-scoped from testing. This can result in considerable rework and in the worst cases to inappropriate marketing or customer contact.

Data Protection Impact Assessments (DPIAs) are intended to protect against such unintended data changes. Previously only recommended by the ICO, the GDPR is more explicit in what is expected:

“DPIAs to be carried out if the planned processing is likely to result in a high risk to rights and freedoms of individuals — including where processing involves ’new technologies’ or ‘large-scale processing.’”

So, what do you need to do for a DPIA? Basically, it’s an investigation to identify how such risks will be mitigated. Could the planned systems changes produce effects on either data stored or on use of data that would breach the GDPR? Is monitoring required to avoid this? Given that the ICO is due to publish a list of the kind of processing operations that require DPIAs, it’s worth planning for them.

As a quick checklist, you should seek to answer these questions regarding your DPIA:

  • What is the possible risk to individuals from changes (to systems, processes, etc.)?
  • What is the risk of non-compliance with GDPR? (Consider all the topics in our two posts.)
  • Which principles and regulations might be breached?
  • Is there any associated organizational risk? (E.g. reputations at risk if goes wrong?)
  • Who should be consulted? (This includes third parties and teams using personal data.)

One final point:  Within the GDPR guidance, there’s also an expectation of being “designed for compliance.” There’s far less tolerance for new systems not being designed to store and use data in line with GDPR rules. So, it’s well worth reviewing any current and planned projects to ensure they are allowing for the data fields and checks that will be required. Don’t try to use the opportunity to blame legacy systems.

Record-keeping and contracts (What should these cover?)

Financial services firms will be used to the record-keeping requirements from other regulations (including FCA’s Conduct Risk). Another area where GDPR goes further than previous rules is in the expectation of records being kept. If a data controller or data processor has more than 250 employees, “detailed records of the processing” need to be kept. SMEs (fewer than 250 employees) are generally exempt, unless the processing carries a “high privacy risk” or involves “sensitive data.”

So what records must you keep?

As a rough guide, it’s high-level records on policies and people, including:

  • Name and contact details of data controllers and DPOs (more about them soon);
  • Purpose of processing;
  • Classes of data (e.g. personal, sensitive, product, etc.);
  • Details of recipients of data;
  • Details of any overseas transfers;
  • Data retention periods (replying on date stamps on data items); and
  • Security measures in place (data access, authentication, etc)

As an aside for insight leaders, recognizing the need to keep all these records prompts me to speak up about the need for better knowledge management solutions. Previously, I made a plea for more emphasis on metadata. Given that insight leaders also have a challenge to retain analysts and the insights they have gleaned while working there, an easy way to store insights and data as well as data about data is clear. However, despite years of variants of database, intranet, groupware and other potential solutions, most businesses still lack a routinely used knowledge management solution. I hope the success of products such as Evernote will prompt more complete solutions.

Data Protection Officers (DPOs) (Do you need one, and what should they do?)

Over the course of reading these two posts on GDPR, you may be beginning to wonder who carries the can. In other words, who is liable to go to jail or be prosecuted if this work is not done? The answer, for many firms will be the Data Protection Officer (DPO). Far from being a scapegoat, the DPO is intended to be the internal conscience — akin to an internal audit role in helping prevent breaches.

The ICO was previously silent on any formal need for such a position, despite the growing popularity of appointing Chief Data Officers (CDO). At one stage, it was expected that GDPR would require every organization to have a DPO, but the final wording was more tolerant.

The following have to have DPOs:

  • Organizations where processing is “likely to results in a risk to data subjects”;
  • Organizations involving large-scale monitoring or sensitive data (ICO guidance should clarify); and
  • Public authorities or bodies.

A DPO is required to have the requisite data skills, and their details should be published to encourage contact with data subjects. But there are also protections to ensure the DPO isn’t brought under undue internal pressure. The DPO isn’t to be instructed how to carry out the duties. DPOs may not be dismissed or penalized for performing their tasks, and they have to report directly to the highest level of the organization. Given that freedom and responsibility, it isn’t surprising that a number of businesses will ask their CDO to take on the DPO role, as well.

See also: It’s Time for a New Look at Metadata  

What are DPOs expected to do, then, if they can’t be over-guided internally? Well, this:

  • Inform and advise data controllers to ensure compliance;
  • Monitor compliance with GDPR;
  • Provide advice to others where requested (e.g. DPIAs); and
  • Cooperate with the ICO, including notifying the ICO about any breaches.

Given all the concerns, it’s not surprising to see a growing industry of data breach insurance. However, it’s worth reading about the requirements. Many require very stringent internal controls and may not pay out if any insider collusion is identified.

How are you preparing? Do you have any tips?

Only time will tell how the ICO operates under these regulations and how firms respond. So, it’s the start of a journey — but I encourage all data insight leaders to start that journey ASAP.

Please do also share what has worked for you. What have you found useful in thinking through the implications for your organization? Are there any tools or tips and tricks that you’d recommend?

As ever, we’d like to encourage the Customer Insight Leader community to share best practice and help improve our profession.

For further information — and perhaps a next step — I’d recommend the training and certification provided by the IDM. I’ve completed both and found them very useful.

10 Predictions for Insurtech in 2017

It’s time to reflect on the passing year, mark my predictions from last year and throw some light on what I see 2017 holding in store.

In my post from this time last year, I made a number of predictions, so, now, I wanted to look at how I did. Feel free to jump in and see how close to the mark I was and share your perspectives.

Reviewing 2016 — How did I do?

1. Fintech and insurtech.  In last year’s piece, I said that 2015 was the year of the zone, loft, garage and accelerator and that this would continue in 2016 with more focus. Regarding fintech and insurtech, I was right. We have seen some heavyweight investment (more so in the U.S. and Asia) and no major failures, to my knowledge. Trending up. Points: 1. 

2. Evolution of IoT. In 2015, I wrote, “2016 will be the year we all realize (IoT) is just another data/automated question set.” Evolution here is continuing, but not at the pace I expected. New firms such as Concirrus (and many others) have come up with some great examples of managing and leveraging the ecosystem. Points 2.

3. Digital and data. At the end of last year, I said 2016 would continue to be a big area of growth for both. There’s been progress, yes, and pace and traction ahead of what’s expected. Points 3.

4. M&A will continue but will slow. I think this has slowed this year, with two of the three major regions in the latter half of the year focused on Brexit and the U.S. election. Now, folks are trying to work out where that leaves fintech/insurtech. Points 4.

5. Will the CDO Survive? I said I thought we’d see a move back to the chief customer officer. Well, no sign of my chief customer officers yet! (Although, after writing this, I came across three chief customer officers, so it’s a start). Have you ever asked an insurance company or people inside the company “who owns the customer?” To me, we’re still product-centric rather than customer-centric. Points 4.

6. New business models. I said last year that we’d need to be clear on what the new business model will be — and what it needs to be. This year, there’s been lots of talk in this area, including here at Deloitte in our Turbulence Ahead report. We identified four business models for the future: 1) Individualization of insurance, 2) Off-the-shelf insurance, 3) Insurance as utilities and, finally, 4) Insurance as portfolio. It may take longer for this to materialize, but, without doubt, these models are coming. See my colleague Emma Logan describe these here. Points 5.

7. What we buy and sell. I believed that, last year, we’d move away from a product mindset to become more relevant and convenient. But we’re still in talking mode, although the ideas here are evolving rapidly. Expect an all-risks policy in Q2 2017. Points 5.

8. Cyber is the new digital. There has been an increase in the number of products and players, but there still hasn’t been any personal cyber policy. I expect that to come in 2017 still. Points 6.

9. Partnerships and bundling. In 2015, I thought we’d see a big rise in the partnerships between insurers and third parties. That’s happened. Points: 7.

So I’m marking my 2015 predictions as 7/9 (or 78% ) — a good effort, but I may have been a bit too ambitious.

See also: 4 Marketing Lessons for Insurtechs  

Moving into 2017

Re-reading the above, I still feel all my predictions are valid, be it the end of the CDO, the birth of personal cyber or an all-risks policy. I’ve been involved in enough conversations over the last 12 months to say these are all very real, although some are closer to seeing the light of day than others.

Moving into 2017, here are my top 10 trends to watch:

  1. Speed. Almost all conversations about insurance start with a statement that we’re not moving quickly enough — from transforming and modernizing the legacy estates to quite simply getting products to market quicker. We can no longer wait six months to launch new or updated products. Look at those who managed to capitalize on Pokemon Go insurance cover. In insurance, we’ll move from fast walking to jogging and sprinting. But take caution: This is still a marathon, and there’s still a long way to go. In fact, as Rick Huckstep wrote recently, the sheer speed at which the insurance market has grown in the last 21 months is part of the challenge and attraction.
  2. AI, cognitive learning and machine learning. AI has been long bandied around as a material disruptor. On the back of collecting/orchestrating the data, it’s critical to drive material insight and intelligence from this and allow organizations, brokers and consumers to make subsequent decisions. In 2017, AI will come of age with some impressive examples, including voice. In 2016, we saw Amazon’s Echo and Google Home product launches, as well as some insurers — like Liberty Mutual — giving voice a try. Imagine asking freely, “Am I covered for…?” or, “What’s the status of my claim?” Adding this skill to the mix will likely be table stakes. In addition, AI will augment other solutions to drive value, e.g. robotic process automation, which I wrote about here. All this boils down to getting a better grip on the amazing data we have already while leveraging the vast open data sets available to us.
  3. Line of business focus shift. The insurtech world will make a definitive shift from all the wonderful personal line examples to SME (the next obvious candidate) and to more specialty and complex commercial examples. Will Thorne of the Channel Syndicate wrote a great piece on this in November. While the challenges are harder and more complex, I believe the benefits are greater once we get to them.
  4. Believers. The market has polarized somewhat between those who believe in major innovation and are pushing hard, and those who don’t (or have a different focus and near-term objectives). The range is from those who worry about the next 90 days/half-year results to those who are actively looking to cannibalize their business and investing to find the most efficient way to do this. Here, there’s no right or wrong, with hundreds of organizations strewn across the path. I still believe more will move to the cannibalization route as the first carriers start to unlock material value in 2017, including continued startup acquisition. Oliver Bate (Allianz) had an interesting and positive perspective on this during his company’s investor day in November.
  5. Scale and profitability. Over the last 12 to 18 months, I’ve seen some great startup organizations; internal innovation and disruption teams; VCs; and more. Now is the time to work out how we industrialize and scale these. This is the very same challenge the banking and fintech communities are going through. If you’re an insurance company with 30 million or 80 million global customers, should you be worried about Startup X that has 10,000 or 100,000 customers? If they do manage to scale, can they do so profitability? This reminds me of a recent article about how unprofitable Uber is, but, with millions of engaged customers, they have our attention now. Profitability will become front and center. In fact, Andrew Rear over at Munich Re Digital Partners put together a good post on what the company looks for and why he and the team chose the six they did.
  6. Orchestration. With all of these startups in insurtech, we’ll need to quickly understand what role they play. Are they a platform play, end product play, point disruptor or something else? Regardless, given the volume and velocity of data generation, the importance of both API connectivity and the ability to orchestrate it will increase dramatically. For me, these are table stakes.
  7. External disruptors. In the Turbulence Ahead The Future of General Insurance report released earlier this year, we identified six key external disruptors that are happening regardless of the insurance industry. These are 1) the sharing economy, 2) self-driving cars and ADAS, 3) the Internet of Things, 4) social and big data, 5) machine learning and predictive analytics, and 6) distributed ledger technology. The key for me within insurance is to identify what role we’ll play. I believe we’ll continue to firmly be the partner of choice for many given our societal and necessary position in the global economy.
  8. Micro insurance. Here, I specifically mean the growth of micro policies, covering specific risks for specific times. Whereas we typically annually see 1.1 policies per customer, we’ll see eight to 10 micro policies covering a shorter period (episodic or usage-based insurance) as per our business models described in the Turbulence Report. This will be true for all lines of business. We’ve already seen some great launches in this space — including Trov, which partnered with Munich Re in the U.S., AXA in the U.K. and SunCorp in Australia. There’s been global access through partnering with established players that has created a new way to market to the next generation. While we switch this on manually by swiping left and right (given some of the external disruptors and location based services), this will very much be automatic going forward. Insurers will need to find new ways to orchestrate, partner and find value to bring in clients. It won’t be just one policy, it will be many that they orchestrate to deliver clients everything they need.
  9. Blockchain and DLT. I almost didn’t include blockchain here, but two factors have led me to include this for the first time: 1) the number of requests we’re now seeing in the market for both specific solutions and more education/use cases and 2) the fact that nine of the 18 startups in the FCA’s new Sandbox are blockchain-related. In 2016, we saw lots of PoC examples, trials and the first live insurance product on the blockchain (see: FlightDelay). Some use cases are more developed than others, and some markets are more suitable than others (I’m still looking for good examples in personal lines), so I believe this will evolve in 2017 but that there won’t be scale breakthroughs. However, along with the World Economic Forum, I firmly believe that “The most imminent effects of disruption will be felt in the banking sector; however, the greatest impact of disruption is likely to be felt in the insurance sector.” We still must ask, “why blockchain?” Just because you can use it? It needs to be the right solution for the right business problem. Horizontal use cases such as digital identity or payments offer compelling use cases that can easily be applied within insurance. In many ways, blockchain, for me, feels much more like an infrastructure play in the same way we would do core systems transformation (policy, claims, billing, finance, etc.)
  10. Business as usual — for now! Partly related to No. 4, we still need to run our business. How we do this and how we set up for the future will be another challenge — not just from a technology perspective but from a people and organization design perspective. (How we work, collaborate and more.) What are the transition states from our current models to a new world in 12, 24 or 36 months. Forward-thinking organization are putting plans in place now for their organizations in the years to come. This will become more important as we embed, partner and acquire startups and move toward new ways of engaging and working with customers.

Interestingly, there are now also so many accelerators, garages, hubs, etc. that startups all now have a lot of choices regarding where to incubate and grow. This presents a whole new challenge on the rush to insurance disruption.

See also: Asia Will Be Focus of Insurtech in 2017  

Finally, there are two other observations I wanted to share:

  1. China. While I don’t spend any time in China, it’s hard not to be in awe of what is going on — specifically, the speed and scale at which things are happening. China’s first online insurer, Zhong An, did an interview with Bloomberg regarding what the company is doing with technology (including blockchain) and, more importantly, its scale ($8 billion market cap in two years, 1.6 billion policies sold) — and the only concern from the COO, Wayne Xu, is that the company isn’t moving quickly enough! Step away from this and look further to what’s happening with disruption in general with Alipay and others from the BAT (China’s equivalent of GAFA — Baidu, Alibaba and Tencent) is simply amazing. There’s a good FT article on Tencent, the killer-app factory, and the sheer speed and scale of disruption.
  2. Community. The global insurtech (and fintech) community is an amazing group of people from around the world who have come together across borders and time zones to further challenge and develop the market. Each geography has its own unique features, mature players, startups, labs, accelerators, regulators and, of course, independent challenges. We don’t always see eye to eye, which makes it all that more rewarding because you’re challenged by industry veterans and outside-thinking entrepreneurs. This year’s InsureTech Connect in Las Vegas with more than 1,600 people was truly amazing to see. Things have clearly moved far beyond a small isolated hive of activity with varying levels of maturity to a globally recognized movement. It was great to meet and to see so many carriers, startups, VCs, regulators and partners looking to further the conversation and debate around insurance and insurtech. This community will, no doubt, continue to grow at a fast pace as we look for insurtech successes, and I look forward to seeing how the 2017 discussion, debate and collaboration will continue.

As always, I look forward to your feedback! What I have I missed?

Here’s to an exciting 2017!

How Technology Breaks Down Silos

Overview

New digital technologies and the data they are producing have forced collaboration among senior business leaders across all levels of all organizations. To obtain insights from data to drive decision-making and embed a data-driven approach within a company’s culture, it is critical for the C-suite to lead the way.

It’s easy to talk about collaboration, but much harder to act. Analyzing information, deriving insights and responding with effective strategies requires an understanding of the analytical tools themselves, as well as collaboration. As technologies get smarter and various functional groups collaborate, simply moving to single systems can give broader teams greater visibility to inefficiencies and broken processes.

But how does a business get to such a place? What tools and strategies bring about successful coordination of activities in such dynamic situations? And what are the challenges of working together that C-Suite executives should anticipate?

In Depth

Just about every functional group within an organization can now collect, connect and analyze data. But big data – from keyword searches, social sites, wearables, mobile devices, customer feedback and so on – presents challenges as well as opportunities for business leaders. One of the biggest is how to maximize the potential of this data by transcending organizational silos to unlock its true potential.

Technology is also transforming how businesses develop and deliver goods and services and is placing enormous new demands on those responsible for strategies to navigate the challenges. These are the people who need to apply institutional knowledge, implement changes and allocate resources toward new ways of working on a day-to-day basis.

Paul Mang, Global CEO of Analytics and leader of the Aon Center for Innovation and Analytics in Singapore, says there are two types of data analysis that can be leveraged to accomplish this: business analytics and enterprise analytics. Business analytics focus on the use of established tools and capabilities, while enterprise analytics “create new product or value propositions for existing clients or new client segments altogether.”  Short-term, enterprise analytics can lead to disruptive innovation while quickly contributing to improved long-term performance.

“Business and enterprise analytics should work side-by-side and complement each other” to support decision making, Mang says.

The Changing Role of the CIO

The need to become an effective data-driven organization has dramatically increased the importance of the chief information officer (CIO), a role that John Bruno, chief information officer at Aon, says is that of “an integrator – someone who works across the entire organization to embed data within the business.”  He sees the value that information technology (IT) brings, and notes that “IT is less about bits and bytes of data, but more about bringing them together to extract specific insights.”

The need to centralize and mine big data for market opportunities and to parse out weaknesses is also prompting some firms to create a C-suite level position of chief data officer (CDO). This role would be responsible for working with business managers to identify both internal and external data sets that they may not even realize exist, as well as continually looking for new ways to experiment and apply that data.

Equally critical to communicating changes in customer preferences and behaviors, and for their ability to leverage insights from customer purchase patterns into developing new products and services, is the chief marketing officer (CMO). Like the CMO, the effective CIO needs an intimate understanding of how current technology can increase the company’s sales.

However, Bruno says, “in any large organization, there are multiple leaders in different parts of the organization who address different elements of the same challenges. It’s the CEO who can see the whole view and works to have teams bring forward integrated solutions to distributed problems.” He sees the role of the CEO as one who looks beyond short-term disruptions and organizational adjustments to seize opportunities that ensure long-term growth.

This is why, increasingly, the role of the CIO/CDO is about balancing business needs against an incoming stream of opportunities – and risks. This broad cross-business knowledge can only come from constant and deliberate collaboration with the rest of the C-level executive suite. Above all, the CIO has to be able to effectively show how technology and the subsequent data it brings are assets rather than cost centers. For CIOs to really succeed, this means informing C-level colleagues about technology and the opportunities it can create.

Making Collaboration Count: Finance and HR

The role of the CFO is increasingly about analyzing data to give it meaning and partnering across the organization to make the information actionable. One area that is seeing CFOs use data to drive real results is in collaboration with the chief human resources officer (CHRO).

Eddie Short, Aon Hewitt’s managing director, Global Data & Analytics, says that in most organizations the C-Suite has not been getting sufficient insight into people-related business issues, typically owned by human resources (HR) teams. Today, with the CIO’s help, digital tools are increasingly being used by leading organizations to measure employee performance, reduce attrition and cultivate talent through a better understanding of the data about their workforce that they can gather and analyze.

“People analytics,” as this emerging field is known, attempts to bridge the gap between HR and the rest of the organization by providing specific insights into an organization’s talent. “People analytics is all about connecting the value of your people to the strategic goals and objectives of the business,” Short says. “This approach represents a major opportunity for HR and finance leaders to take a road centered on the greatest asset that organizations have – their people – and start to shape the value-add they will create for the business over the next five to 10 years using predictive analytics.”

With skills shortages an increasingly pressing issue for many organizations around the world, gaining this kind of insight can help a business to identify and meet its future talent needs.

Aligning for Agility

As technology continues to disrupt, CEOs and the C-Suite in general must accept that there may not be a set playbook to follow to adapt and evolve. Flexibility is paramount, and often organizations must invent and reinvent as they move forward. Intelligently applying analytics tools to derive value from big data can help them navigate this new terrain.

“Today, CXOs want predictive insights,” Short says. “They want answers to the predictive ‘what could I do?’ questions as well as prescriptive – ‘what should I do?’ — questions.” Yet most tools and programs currently available are merely descriptive – to derive true insight needs additional interpretations from people who really understand the business.

This is where C-Suite collaboration becomes so vital. Organizations thrive when there are diverse and complementary personnel and systems working together. Sharing insights from the analysis of big data across the C-suite and across functions can position businesses to draw valuable insights from this data, harmonize planning around it, align their actions and understand the full value this brings both to their own divisions and the organization as a whole. And the more that data is shared, the more leading businesses discover that they can find answers to today’s – and tomorrow’s – questions.

With the measurable business benefits this data sharing can bring, the business case for breaking down silos within organizations is stronger than ever. Where this may have once been a C-Suite aspiration, the make-or-break implications of insights drawn from this data has made it a business imperative.

Talking Points

“In every industry, our analysis and our work with clients would suggest technology at a minimum is going to be a tremendous accelerant. So if you have a a business model, the opportunity to scale it more effectively, grow it more effectively gets… amplified.” – Greg Case, CEO, Aon

“The way that big data pervades most organizations today creates a dynamic environment for C-level executives to explore how it can and should be used strategically to add business value.” –  Economist Intelligence Unit

Further Reading

chief digital officer

New C-Suite Member: Chief Digital Officer

More than a quarter of the world’s population owns a smartphone. In 2014, global mobile data traffic reached 2.5 billion gigabytes per month, a figure that is 30 times as large as all the traffic on the Internet for the full year 2000. No wonder global companies are moving rapidly to reshape their businesses to meet this new level of connectivity. One way they are doing so is by appointing a new kind of executive, the chief digital officer (CDO). The CDO’s mandate: to equip companies for the digital future. This executive has the dual task of developing an all-inclusive digital experience for customers and the internal capabilities needed to support that experience — while simultaneously managing the considerable investment required. The emergence of the new role to lead the organization’s digital efforts may in part be a reaction to the chronically weak relationships between CIOs and CMOs, which we’ve observed over the last few years.

The number of companies that have hired CDOs remains small — just 6% globally, according to the results of the inaugural Strategy& study of digital leadership at 1,500 of the world’s largest companies. But the number is growing rapidly. Of the 86 CDOs we found, 31 were appointed in 2015. The sectors where the highest proportion of companies have CDOs are travel and tourism, with 31%; entertainment, media, and communications companies, with 13%; and food and beverage companies, with 11%. At the other end of the spectrum, only 1% of mining and metals companies had a CDO; just 2% of those in the automotive, machinery and engineering sectors did; and only 3% in technology and electronics did. One is also more likely to see CDOs in European companies than in their U.S. or Asian counterparts, and CDOs are more likely to appear in large companies than small ones. We suspect that in many cases where a CDO has not been appointed, it is because the related responsibilities are already distributed among other top management roles and are entrenched in all aspects of the company’s culture.

In the past, traditional CIOs and CTOs were focused primarily on their companies’ IT, managing employee desktops and enterprise-wide ERP and CRM systems. The CDO role, although it varies from one company to another, is far more comprehensive. Besides customer experience, the development of digital features in new products and services and the relevant operational changes, the CDO may oversee changes in technical infrastructure and innovations in data collection and analysis. The CDO must also be an agent of cultural change, championing the digital transformation throughout the company and linking it to the development of the distinctive capabilities that form the basis of a company’s strategy.

Here are glimpses of chief digital officers (or people in similar roles) at four major companies, and the ways in which they meet the challenge of digital transformation:

–Jessica Federer is head of digital development at Bayer. “The data piece is actually the easiest,” she says. “Data is data. It’s the people piece that’s the challenge. So we focus first on the people in the organization, and how we connect across synergies, across silos, over platforms and data.”

Soon after she was appointed, Federer created a digital council consisting of the CIOs and CMOs of the relevant divisions at Bayer. Their task was to look at potential synergies. She also fostered a huge network of people involved in some aspect of digital transformation, to which she gave the acronym NERD (Network for Enterprise Readiness and Digital). “They bring together digital marketing with digital product supply with digital R&D,” Federer says. “We used to do this in silos, but now we do it by sharing information.”

–At Renault, CDO Patrick Hoffstetter is creating a centralized digital transformation organization, which he calls the Digital Factory. This is not a literal factory, but a metaphorical center for people throughout the company who already work on digital projects and another group working at about 65 outside suppliers. The factory is the nexus of communications about the digital strategy, and the place where resources and experts come to design the transition to what Hoffstetter calls “the connected employee.” The changes put into place at the Digital Factory will affect how people work, what they expect from the company and what tools they are given.

Balancing the timetable for this complex shift is a key part of the CDO’s role. “One reason most operations in digital strategy and transformation are focused on sales and marketing is that these functions have a direct, quite short-term impact on the business,” Hoffstetter says. “Whereas when it comes to the evolution of internal processes, internal social networks, acceleration of collaborative tools and internal training, it’s much harder to show any payback, and it takes a lot longer.”

–Corinne Avelines, CDO of the decorative paints division of the Dutch chemical company AkzoNobel, says broad support is critical: “Commitment at the top management level to innovation and digitization has made my job considerably easier,” she says. “Senior support is key to ensuring commitment to digital at the company, especially one of this size.”

At the same time, she says, overall strategy must always drive decisions about how and what to digitize. “Gaining a competitive advantage in a fast-digitizing age is a challenge, so CDOs must understand their company’s current position and future strategy — what will make an impact on providing value to the customer — and focus on that. Worry about the other things later.”

–Visa CDO Chris Curtin says that he has learned to participate actively in the creation of the overall business strategy — and lead the process when necessary. “I not only think that the best CDOs are reflective of the business,” he says, “I think that in many respects they are the business.” To that end, he believes that CDOs should “forget about digital. Forget about new media. The business objective has to permeate the thinking and the strategies and the go-to-market approach of the CDO and his and her team. Never make the means the end. A million followers on Twitter is just a means. The end is the business goal.”

The CDOs interviewed for this study all emphasized the importance of working closely with every function of the business. Being part of top management gives them a critical strategic perspective, but they must also be given the power and support they need from functional groups. Otherwise, they may find themselves with a seat at the table but without the strategic and operational input that the digital transformation needs.

Ultimately, the goal of every CDO is to ingrain the digital agenda so deeply and efficiently that it will become a way of life for everyone and every function in the organization, and a priority for every member of its C-suite. Sooner or later, companies may get to a point where a transformation isn’t necessary, because it has already happened. Digital technology will be so well-integrated that it won’t be a separate issue anymore. It will simply be part of the way people work, and the CDO will move to some new type of challenge.

This article was written by:

  • Roman Friedrich, a leading practitioner with Strategy&, PwC’s strategy consulting business, and a partner with PwC Germany. He is based in Düsseldorf and Stockholm.
  • Pierre Péladeau, a thought leader on digital strategy with Strategy& and a  partner with PwC France, based in Paris.
  • Kai Mueller, a specialist with Strategy& and a senior research and knowledge manager with PwC Germany, based in Berlin.