I am sitting here on a Friday at 4.23PM in…
“Digitization is reviewing the rules of competition,” write Martin Hirt and Paul Willmott in McKinsey & Co Quarterly’s May 2014 review while reflecting on the impact that digitization is having on established and new companies alike. The article ends with 6 critical decisions that CEOs need to answer in order to react to the advent of digitization. This article will expand on the fourth decision.
Click here to read about the introduction and first decision.
Click here to read about the second decision.
Click here to read about the third decision.
Click here to read about the fourth decision.
Click here to read about the fifth decision
Decision 6: Delegate or own the digital agenda?
Digital is now part of most customer-company dynamics. Because of this, there has been an increasing need for companies to have a role to oversee such dynamics: the Chief Digital Officer. According to the 2015 Chief Digital Officer Study, “For companies that have appointed a Chief Digital Officer, over 80% have been hired since 2012 and 40 percent are members of the C-suite. This suggests that the role of the C-suite is being redefined, with many Chief Digital Officers coming from a variety of backgrounds, from marketing (34%), to sales (17%) and technology (14%).” However, this trend is really just beginning. Most companies still don’t have a CDO and when they have some kind of digital-related role, it’s usually a lower-level one. That happens when a company manages the digital change at the functional, business unit, and geographical level, which is a sign that, in that given company, digital is still not fully integrated with the overall business operations.
In some cases, CEOs fear that relying on CDOs to manage the digital agenda may yield negative results because the objectives of the CDO may have too narrow of a focus. However, if that happens, the reason is probably a lack of digital integration within the company. If digital is a fundamental part of the overall strategy, implementing digital initiatives would do nothing but enhance the success of the strategy itself. If it isn’t, that implies that any digital effort would require approval of the CEO, so it may be more beneficial and cost-efficient for the CEO to take care of it. In other words, if a company’s strategy gives digital a pivotal role, hiring a Chief Digital Officer will be beneficial and cost-efficient. The CDO will make sure that such dynamic is maintained without drifting away from the company’s main objectives. An example of a company that has succeeded in its CDO-related strategy is Walgreens.
Answer: Unless digitization is a top-three agenda item for your company and unless implementing digital initiatives requires a lot of resources and long approval processes, consider delegating digital supervision to a Chief Digital Officer.
C-suite digital strategy accomplishments at Walgreens
Before joining Walgreens as president of digital and Chief Marketing Officer, Sona Chawla used to be vice president of global online business at Dell, a leading technology company. Her background fit Walgreen’s need to integrate e-commerce with the in-store experience. When they hired Chawla, Walgreens had three main objectives in mind for the whole organization: reinvent the customer relationship through technology, remove friction from the customer journey, and make sales training a key component of marketing.
She satisfied the first goal by making “convenience” about time savings more so than cheap prices. During her time at Walgreens, the drug retailing chain rolled out initiatives such as mobile drug refill orders, text alert on when to pick up a prescription, calendar reminder on when to take a given medicine, extra points to patients with a healthy behavior, 24/7 live chat with doctors, and extended prescription refill capability through partners like WebMD. Especially when it comes to pharmaceuticals, it’s hard for retailers to compete on price, since even the generic drugs tend to have similar prices. Therefore, differentiating one’s product rather than striving for cheapness is a better business strategy. Together, these technological initiatives differentiated Walgreens’ product offering from that of other drugstores, thus increasing its competitiveness. These initiatives also played a role in pursuing the second objective, creating a seamless customer experience. When wanting to improve its customer experience, Walgreens located various pain points along the CX and solved for them. Some of the pain points were related to convenience, hence the implementation of the above technological innovations. Other pain points were related to logistics. Such is the case of longing for an in-and-out shopping experience. In order to allow for an in-and-out shopping experience, Walgreens created an app-enabled “planogram” to allow users to navigate the aisles of their local Walgreen stores through their phones and quickly find the products they need. Interestingly enough, this tech feature was implemented alongside a nondigital and much more concrete innovation: rolling carts that glide across the floor so that customers can navigate the corridors more quickly and with more products than they would if they had to use shopping baskets. Lastly, in order to make sales training a key component of marketing, Walgreens used monitor and mapping tools to observe the in-store customer behavior and revolve the sales training around the pain points that such observation pointed out.
Digital strategies work best when they serve a larger goal within the organization. As explained in her biography, Chawla wasn’t simply hired to drive more traffic to Walgreens website. She was hired to advance Walgreens’ vision for an omni-channel customer experience by “developing and leveraging its corporate brand, integrated portfolio of marketing assets, web and mobile offerings, Balance® Rewards loyalty program, and customer insights.” By placing her in a C-suite role, Walgreens highlighted the importance of digital within the organization and assured that the pivotal steps towards digital integration be executed with the necessary knowledge and dedication. Walgreen’s case study shows that, if digital is integrated with your company, the roles across your company should match that.