CMOs are ideally placed to transform into CGOs as they control the digital levers, but need to be Quants as much as Creatives
Tom Siebel is CEO of C3 IoT, a former Oracle executive who subsequently moved on, created a business and made his money by selling one of his companies back to Oracle. Now he leads an IoT platform, and he caught my eye because I was flipping through Fox Business and saw the captions “Artificial Intelligence”. And “AI Dominating the Future”.
Curiosity peeked, I watched the clip and listened to what Siebel had to say. Fox and cable TV are renowned for the soundbite approach to television, but in this instance it was delivering what everyone ought to be aware of:
Digital Transformation is a phenomenon being driven by companies such as Amazon, and embraced by companies such as Honeywell, John Deere, United Healthcare, Caterpillar Tractor, and others.
- 30% of Fortune 500 will not exist in 30 years because these companies will not successfully transform or fail to even try.
- Washington DC is irrelevant to innovative businesses employing Internet of Things (IoT) and Artificial Intelligence (AI).
- The markets believe these things to be true, which is why Amazon with 25% of Walmart’s revenues has a greater market cap. Ditto for Tesla with one-twentieth of GM’s sales, and double the market capitalization.
- If Amazon decides to go into the pharmaceutical business, CVS and pharma-distributors are out of business overnight.
- Everything has changed from how we deal with customers, how we manufacture and deliver goods and services, and everything about how we run our businesses.
- If a business is not awake to the need for Digital Transformation, it will die.
The reason I’m focusing on this interview is because I feel it is an excellent reflection upon the fundamental commercial impact of AI, IoT, and Digital Transformation.
Ultimately, the whole morass of challenges we grapple with is all about how we create and deliver value, both to customers (customer driven), but also to shareholders.
I own shares – I want to see those holdings grow, because my retirement and family rely upon them.
Same for you.
The current value of our shares is determined by discounting their future value, trying to take into account risk and the time-cost of money.
The markets are speaking: Tesla is twice the value of GM today, despite lower revenues, which means the markets think Tesla has a far brighter future than any light bulb made by GE!
So, unless we subscribe to a dystopian or post-apocalyptic future, where there is no Internet or smart phone technology, it is undeniable that any organization which fails to digitally transform itself is going to cease to exist, or more specifically, cease to deliver shareholder value.
What excites me personally though, is that we are right at the start of this wave of change.
Certainly, some businesses such as Uber and Amazon are seizing opportunity, but I think this phase is going to end. Instead, we will see even more imaginative ways of creating and executing business models which are going to make today’s innovators look like dinosaurs.
As Digital Transformation takes hold by both upstart disruptors and established companies successfully making the digital leap, the competitive playing field between old and new will be leveled. Current innovators will grow jaded, while other companies, both old and new, will channel their energies in even more creative and innovative ways (see Breaking the Chains of Innovation on this).
If GM successfully transforms, the imbalance in market valuation with regards to Tesla is going to change.
A crucial leader is going to be the Chief Growth Officer (CGO) and of all of the C-suite, I believe the CMO is best placed to take up the title, but this opportunity has a shelf life!
Keep in mind that the pure CMO is the role of a bygone era. An anachronism that harkens to a time of expense accounts, three-martini lunches and patient shareholders.
An Opportunity for CMOs to Morph Into CGOs?
Accenture have recently published a report that claims >33% of CEO’s are looking to the CMO to drive growth (though all C-suite execs have some responsibility). CMO’s must look to disruptive growth to impact the bottom line, rather than traditional avenues, and it is they who hold the digital levers which can drive this.
But, only 36% of CMO’s see launching a new business model or value chain as a priority, and even less see partnering with non-conventional players as a means of creating value.
I don’t personally agree with everything Accenture’s report contains, but on this I do: CEO’s are in a very hot seat when it comes to delivering value, not just current value, but more importantly future value. Failing to demonstrate where future value will come from already has a massive impact on a company valuation (e.g. Amazon-v-WalMart, Tesla-v-GM).
Failure to find and capitalize on disruptive value is going to result in company failure or takeover.
Previously, we have discussed how important it is for the CTO/CIO and CEO to be able to align technology stacks to execute on the business vision, but now we must throw into the mix the CMO.
The CMO is ideally placed to identify and grasp growth opportunities and also forge partnerships with disruptors where appropriate, which is where future value is to be found. I am firmly of the opinion that while the ‘How’ of Digital Transformation is very important, it is what will be done with a digital organization going forward that is of the highest importance. It is this creative use of the digital organization which will be the wheelhouse of the CGO – the Chief Growth Officer.
Coca Cola has already done away with the CMO role and replaced it with a CGO. With the retirement of Marcos de Quinto, after a 35-year career with Coca Cola, Francisco Crespo will take the growth generating helm as CGO. This is just part of the C-suite shake-up at this company, with the Chief Innovation Officer now reporting directly to the CEO, a newly-created Chief Public Affairs, Communications, & Sustainability officer (I will not dare to use an acronym for that role), and much closer alignment between sales and marketing leaders.
Coca Cola is not alone: similar moves have already been made by Colgate-Palmolive, Coty, and others in a charge led by CPG companies (Consumer Packaged Goods) over the last 5 years. The move to CGOs is fueled by the understanding (correct understanding in my view) that to deliver future value, more than marketing chops will be required.
Technology capabilities and limitations must be embraced and understood.
Stimulating and innovative applications of creative thought drawn from a well of hard data analysis will be required to successfully sell to customers.
Most of all, marketers and their companies must catch-up with their customers: stop being customer-driven because this is reactive! Instead, figure out what customers will want tomorrow and make sure you have it ready for them before they realize they need it themselves.
Predictive AI already tells me what will be a good show to watch on Netflix, what book to read on Amazon, and what music I will like on Spotify.
Personally, I find them all scarily accurate!
For some companies, such as GE, the drive has been for everyone to learn how to code (a challenge laid down by CEO Jeff Immelt), however I feel that misses the point. Learning how to code is not so important as being able to understand the power of technology to be applied to business problems. It is what can be done with technology, rather than how the technology works that is the essential point.
We don’t need to be a mechanic to know how to drive well, or as GE’s CMO Linda Boff said in a Wall Street Journal article, “whether we know how to code or not, we all need to understand the language of software and its importance to the future of the company.”
A traditional CMO was someone with creative vision for creating ad campaigns and media buying, and stereo-typically, unless it was a Mac, a distinct antipathy for technology.
The CGO is someone who grasps the impact and application of Big Data, an advocate and pioneer of the use MarTech, and more than ever, someone who understands the customer, both instinctively and analytically.
Quant skills are now as important as creative ability to generate growth and future value.
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