By Puneet Kalra, Managing Director, Russell Reynolds Associates
The boundaries between technology companies and other sectors are blurring rapidly. The pandemic and the subsequent acceleration of digital transformation has caused retailers, doctors, educational institutes, the BFSI industry, etc., to move their business online. Technology had empowered customers to a point where they could make informed, researched decisions on purchases and therefore lower barriers to switching loyalties. Enterprises were quick to focus their technology efforts on innovation, go-to-market strategies, and digital approaches, in order to address this disruption. However, they are fast recognizing the fact that more complex integration is the need of the hour where go-to-market and technology functions must seamlessly partner with each other to ensure a frictionless and more efficient end-to-end customer journey.
Businesses are revisiting their organizational structures to develop processes and models that introduce better connectivity through the entire customer lifecycle, right through the use of technology, digital solutions, product offering, marketing, and sales. Intelligent structuring therefore would entail accountability from one or two leaders rather than multiple leaders with overlapping remits, and employees under them who answer to multiple bosses. Enterprises should focus on speed, creativity, and accountability, for a faster and flatter team where the priority is connectivity, rather than legacy silos.
Today, we see an influx of new roles in the go-to-market function, with the introduction of Chief Customer Officers, Chief Growth Officers, or Chief Revenue Officers. However, as digital transformation takes on greater importance, leaders in the organization are now expected to have front-end capabilities and go beyond to understand data and back-end processes as well.
In the technology function, we witness single leaders who are responsible for all the tech, from security, data, IT, engineering, and digital customer touchpoints and in some cases, digital product development. These leaders should be capable of being customer-centric and provide strategic advice to the executive committee while reporting to the CEO. The titles of these roles are almost immaterial, with the difference between CIOs, CTOs, CDOs, and any combination of the three dematerialising over time.
The restructuring of functions to flatten the talent pyramid and reduce the number of leaders with accountability most frequently is carried out in one of three primary ways:
1. The technology responsibility expands to encompass product, advanced analytics, and enterprise transformation, thereby straddling what would have been the Chief Digital Officer role
2. The marketing remit is combined with digital to create a holistic customer-focused role. Here the leader looks at digital touchpoints, channel strategy, customer experience, and e-commerce
3. A third role is brought in to better connect go-to-market and technology functions
Category 1, where the technology responsibility expands into the conventional Chief Digital Officer territory, is witnessing increased popularity due to the growing importance and the elevation of the tech leader role, the overall expansion of the technology function, and the use of technology in the strategy of a company. The leader has a vast remit that encompasses technology and engineering, data management, IT, product management, analytics, and digital. This function is assisted with creative and brand focus delivered via a marketing officer, who might or not be on the executive committee. The technology leader, however, almost inevitably sits on the executive committee and reports to the CEO.
Category 2 where the go-to-market responsibility increases to encompass traditional Chief Digital Officer responsibilities, is the least common of the structural archetypes. Here we see a combined marketing and digital function, or an omnichannel leader sitting on the executive committee. The leader is responsible for all marketing from performance, digital, brand, go-to-market strategy, omnichannel customer experience, product management, and sales. Now we see the marketing organization is centralized and the leader reports to the CEO, rather than spreading reporting across business lines. In this example, the tech leader will focus internally to cover business services, IT/Technology, and operations.
Category 3 is when a technology leader, a marketing leader, and a third leader work together to bridge the divide between functions. This structure facilitates the deeper expertise of each area; however, it has the disadvantage of separating accountability at the executive level. The marketing leader holds the brand and the channel remit. The middle leader who is often a Chief Digital or Product Officer focuses on customer-facing technology, digital touchpoints, and digital products. The technology leader oversees IT and technology, engineering teams, network infrastructure, and telecoms. Typically, in this structure, two of the three leaders will be on the executive committee.
The technology leader would most likely report to a CFO or a COO, due to the smaller responsibility. This is becoming increasingly rare. We found that 85 percent of top technology leaders appointed to FTSE or Fortune 500 companies last year sat on the executive committee, compared to just below half of all top tech leaders in those indices.
Pure-tech models found in technology and platform organizations more often than not comprise of three roles.
1) A CTO with an engineering focus and the responsibility to build products and platforms
2) A Chief Product Officer to oversee design, strategy, product management, roadmaps, and customer experience
3) A brand and creative-focused Chief Marketing Officer
In this scenario, the CPO and the CTO typically sit on the executive committee, and in larger companies, the CTO is supported by an internally focused VP of engineering who also sits on a senior leadership team. Sixty-five percent of the technology sector’s go-to-market appointments last year were CMOs or chief revenue officers – a suggestion that these are more growth enabling mandates than customer experience, which would likely be held in the product remit.
When choosing leaders for an organization it is mission-critical that the organization clearly outlines the skills and core expertise that is required. Once that is defined it would then require a decision on if a traditional leader role is called for a more hybrid role such as a CDIO, CTDO, or CDMO.