Arnaud Rayrole : Chief Digital Officers are the future CEOs

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Lecko recently published the 7th edition of their study on the state of the art of enterprise social networks. Besides the benchmark it includes a deep analysis of the market maturity and how businesses are organizing to lead their digital transformation. This year’s issue is titled “Preparing and organising your company for change”. It’s available for free, in english or french.

I had a long conversation with Arnaud Rayrole, Lecko’s co-founder and CEO. Here’s the transcript.

Bertrand Duperrin : Hi Arnaud.Your study is still titled “State of the art of enterprise social networks” but it actually goes far beyond, doesn’t it ?

Arnaud RayroleArnaud Rayrole : Yes indeed, but that’s not the first year it’s going far beyond. But we’re trying to stick to a well-known and defined field. Moreover we don’t want to be in denial regarding to technology. We know that technology has limits but we don’t see it as something “dirty”. Technology has a role to play because it makes things concrete. But concrete things also have downsides : they’re less “pure” than the concept. What happens in tools is always less “pure” than the use case written on the paper.

But when you talk about collaboration with large organizations, it always becomes concrete through technology.

BD : It’s often an issue. Since a large part of the matter is not quantifiable, when people look for evidences of progress they ask for screenshots. It makes them focus on what is visible on the screen, sometimes to the detriment of what happens IRL and is a prerequisite…

AR : I think it’s possible to tell nice stories, success stories. We’re calling that “micro-achievements” : you did not revolutionize your organization but you have small successes, catalyzed by the technology.

[quote_right]Technology is nothing more than a potential that catalyzes usages[/quote_right]

But besides that there’s a prerequisite, necessary but not sufficient. People must work differently on a day in their everyday work. Technology is not sufficient but lack of technology makes things more complicated. We see tools as facilitators. In our matrix of the social potentials we obviously talk about…potentials ! Will a given technology help to make new usages emerge in the workplace. That’s what we’re trying to assess.

That’s why we have no problem using the word ESN even if we know it’s not trendy anymore. But that’s only a part of the study. The second part is about “Getting equipped and organized to transform better”. The guiding principe is to tie digital transformation with enterprise social networks enabled collaboration.

BD : I brought out three things from your study. First the Chief Digital Officer. Second, solutions that are more and more complete. Third, office suites striking back with Office 365 and IBM Verse…even if it’s rather a victory of social collaboration that steps in “legacy” applications.

AR :In fact solutions are not getting bigger and more complex. Let’s take the example of Yammer. It becomes richer by providing translation but that’s not a new functionality, it’s transparent for the end user. Today, vendors can enrich without adding new functionalities.

So there are two main fields for improvement : user experience and integration.

BD :At the beginning each solutions was good at something specific, they all started with a specific assumption. Today they all have converged and offer nearly the same things. What makes a difference is user experience (and integration is a factor of better experience) and experience is not social only. It’s in your old business applications, your email client, your office suite…so experience must be cross-applications

[quote_left]Clients don’t do functional specifications anymore[/quote_left]

AR : Today, businesses wonder less and less about functionalities. Mainly because of the cloud and turnkey solutions. They lose the habit of writing functional specifications and that’s a good thing.When they assess a solution they don’t look for such or such functionality anymore but ask “what’s my usage, my use case“, “how will it happen in this solution ?“.

BD :I remember of a former client…We did not make functional specifications but told vendors “here are the use cases, show us how they will become live in your solution”. But that’s quite recent. A couple of years ago it would have been impossible to sell such an approach.

AR : …but it becomes easier every day. When a client is still with an old “design, specify, test, deploy” model I ask him “but what do you want to do…it’s a Saas Solution !”. There is nothing to design, no specific development and nothing to deploy from a technical perspective. So they need to refocus on something else and this something is the use cases.

When you can’t transform the tool you must focus on the use-cases. That’s the good side of what we’ve been seing for the last 2 or 3 years.

BD : I must confess I’ve never been convinced by Saas solutions for large projects in large organizations. If you think beyond the social network and switch to a digital workplace approach, you need so much integration and there are so many specific applications that a 100% Saas approach is impossible. I believe in the cloud but more in Paas or Iaas approaches because such projects need a lot of  “plumbing”.

AR : That will be possible in 5 or 10 years but it’s true that today we still have a long way to do. The Digital Workplace is a course but, today, it’s an unkeepable industrial promise for the reasons you just mentioned. Those who try to make it on premises end with mammoth projects, are slowed down by technology concerns and lose something  essential  : agility. If you lose agility on a matter that moves that fast, your project becomes obsolete in less that three years.

BD : So let’s talk about the Chief Digital Officer. According to your study, how do you define this person ?

AR : He reports to the executive board and his first mission is to define a digital strategy, the second to execute it what means convincing everyone from HR to business lines, including marketing, product management or IT to play a part.

He focuses on change and on setting the organization in motion.

BD : So it’s rather a “chief transformation officer“. And what’s his profile ?

AR : It’s not the CIO becoming a CDO. It’s not the CMO either. The CDO is an executive profile, someone who could have been good in many other positions. They were not appointed because their technical expertise.

BD : So rather “macro” and “systemic”…? People capable of getting the “big picture” in a complex organization…

AR : That’s the profile of the  CDOs we met. Some people will disagree but I think that CDOs are building tomorrow’s businesses. In the executive board they are those who are the moste likely to become the boss one day, to become CEOs. Provided they successfully achieve the transformation..

BD : That sounds logical…

AR : Not everyone agrees. Some sees it as a fad.

BD : The fact the CDO may, one day, become the boss does not mean he should not plan his own obsolescence

AR : Do you think we’re moving from a point A to a point B or that we’re starting from a point A  to never stop and continuously accelerate ? Today, businesses are setting themselves in motion and they’re not going to stop !

If you think that it’s about nothing more than digital then, obviously, they should disappear in the next five years. But if you think that it’s about setting a business in motion then they’re here to stay even if the job position may change name over time.

BD : So we’re back to our previou point. Setting a business in motion is the role of the Chief Digital Officer today but it should be the CEO’s ! We have CDOs because CEOs don’t make it !

[quote_right]Setting a business in motion is the CEO’s job but is currently done by the CDO[/quote_right]

AR : Obviously. It’s hard for businesses to cannibalize themselves. But they must understand that they have to invent the service that will kill their own business. GAFAs are very good at that but most of traditional businesses aren’t.

I think that’s a part of the Chief Digital Officer role : getting the organization ready and start the digital innovations that will kill their current business, both from a customer perspective and internally.

BD : You’re talking about the internal and external sides. Using a “plane metaphore” is often say that in a digital business, customers are the lift and employees the thrust. How do you see the balance between the internal and external perspectives ? I have often the impression that a lot is made on the external side while employees are still looking for a sense of purpose, while this sense of purpose should come from the customer orientation and the impact one has on the customer and the revenue, the growth etc. But it seems that both sides are managed in silos…

AR : Without thrust your plane will fall and without lift, it will speed up low to the ground and end in a wall…

The chief digital officers I met say the same. No one denies the importance of the internal side or think about building tomorrow’s business without the employees.

That said, we all know that working on the external side is easier than on the internal. If you want to work on an innovative product and if your employees don’t follow you you can outsource it with partners, build a prototype, test, and bring it back inside later. But, by definition, you can’t outsource the internal side, your employees, do with and without them at the same time.

[quote_left]Support functions are locked in their bubble[/quote_left]

We must also understand that support functions are less exposed to the changes in their environment than business lines. People in communication, sales, marketing, are always competing with other businesses in a fast changing environments so they challenge themselves. In large organizations, HR are locked in their own bubble, they only manage the inside…

BD : Talking about impact…in large organizations people don’t see the impact of what they do, of their change…

AR : yes…in these businesses, support functions are only challenged by themselves. It’s not helpful. Communication people who missed the the digital train are out of the business today while HR people who missed the train still find that their world did not change that much.

So the role of the Chief Digital Officer is also to help these people to become more open, more aware of what’s happening outside and challenge themselves regarding to other businesses’ best practices.

BD : Still about change…you say that community managers, change agents, have a bigger impact than C-Level people.

AR : None can work without the other. having a vision is nice but one has to make it concrete. Businesses know they have to cultivate leadership at the bottom of the organization, close to the spot. Internal transformation relies on these people able to drag others.

BD : Over the years, the community manager who used to be a content producer became a “program manager”…

AR : Yes. I call them practice leaders. I emphasise the word because I tell them that if they see themselves more as project managers than leaders, people won’t follow them.

BD : To end with the organizational side, did you notice any change in measurement practices and indicators ?

AR : There are still business and usage indicators to measure from a quantitative or qualitative standpoint. But when you consider the mass to see if new behaviors are emerging because theses behaviors are what will generate value tomorrow, then you need to rely on analytics.

[quote_right]Consuming information is not a passive attitude[/quote_right]

Regarding this field we have a benchmark of about 20 large businesses, a 5-years history on 100 000 active users. Let me give you a concrete example : on a social network, the people consuming information are not anonymous nor passive. They tag to bring content together, forward or like to drive attention and promote a content and even comment to enrich and bring some perspective. Consuming is an active action. You can measure it with analytics. We notices that the more engaged people you have in a network the more people ask question and get an answer in a short timeframe, what leads to concrete business successes like a sale.

BD : Do you think that one day analytics will help to correlate online behaviors with business indicators ?

AR : We’re not that far. But, in my opinion, the weak point is in the “old world”, in the way many things are rewarded. How to you value the fact an information shared by someone help another one to close a deal ?

BD : I was thinking about the relationship between any social activity in the network and a measured indicator like turnover, length of the sales cycle…

AR : Everything we need to do it is there. But waiting to be convinced and have clear evidences of the ROI to start is not a good idea.

[quote_left]Analytics are a ROI calculator but can help to track it[/quote_left]

Today we need analytics and indicators to help teams to benchmark and compare themselves in the context of a large scale deployment. Two people who started communities with similar purposes can compare their results and what causes these results. Then they begin to talk, share their practices and then they improve.

Analytics are not ROI calculators but when you’re in dense fog it helps you to understand what’s going on and why.

BD : In my opinion it’s a tool to track value. ROI is mechanical, analytics helps you to track flows and their impact.

AR : Without going that far, what matters today is to help people to mobilize others. Being able to measure networking and connectedness is key.

What our benchmark showed ;

1°) intensification of usages : engagement increased by 17% in one year.

2°) Crowding  : some businesses have 10 000 users who are actually active, not just registered, with an average of 2 500.

These platforms are accessible by all employees but not everyone adopts them in a single glace. Some imagine that it’s going to happen fast while it takes years. You need 4 or 5 years to reach a critical mass.

BD : Let’s end with the solutions. I’ve noticed a couple of things in your study. The first is the very good score of Office 365. Alone or thanks to Yammer ?

AR : Clearly the articulation with Yammer makes a difference. As a matter of fact if we assess Office 365 without Yammer it ranks much lower and does not have the same potential at all.

BD : Besides that you invited IBM to present IBM Verse. Office, the return of email…is it old office suites striking back ?

AR : When I see IBM Verse it has nothing in common with my old Outlook. It’s social finding its place everywhere, including in the email client. I’ve never been one of those thinking that the email was going to die. Email is evolving.

[quote_right]Social is taking power in legacy software[/quote_right]

It’s not about stocks anymore but flows. And there’s also the idea of circles, of priorities : we must focus more on those we work with everyday. So the staging of the email client is evolving and that’s what IBM brings. More,email as something unique : it’s universal.

BD : most of enterprise social networks are mostly employe facing and everybody has an email address, including customers, which is not the case for ESNs. We did not manage to move the center of gravity of work out of the email client. So it’s logical to see social going where users are and take a major place in the email client.

What leads to the next question. I’ve always considered that to be success an ESN needed to be deeply integrated with other tools. A successful social network is a network users use but don’t see. It looks a lot like a concept you’ve introduced years ago : the social information system.

AR : We’re still on it and will issue things about the Social IS in the future. Our clients realize that they have lots of social platforms in the workplace and that they need to bring some coherence.

BD : Social is not a network anymore but a platform.  Then APIs help to make tools interoperable.

AR : But most vendors still have a “there will be only one survivor and it’s going to be me” approach.

In addition to “bridges” we need a standard for the social graph, whatever the tools people use. We must be able to take any activity into account, no matter where it happens. That’s what has value ! It allows to bring some intelligence in solutions to display the right information at the right place at the right time.

We anticipated this matter two years ago but maybe we were too early.

[quote_left]The entry ticket to social is cheap, the exit ticket will be very expensive[/quote_left]

Today, businesses are captives of their vendors and all the social capital stored in these platforms is poorly usable by others. Changing platforms will be very complicated in the future for this reason. Businesses are burying their head in the sand : the entry ticket to social is cheap on a very competitive market but the exit ticket will be very expensive. Revenue models based on recurring business also make clients even more captive.

Businesses should establish rules to be able to exit, change solutions without losing a social capital that has a huge value. A simple export with a proprietary and ununderstandable data model is useless.

BD : To end, what’s the major learning of your study ? The most important or surprising thing ?

AR : It’s not going to surprise you but we benchmarked the community management practices of the members of our panel. We saw that the same practice could work in some case and not in some others. Success comes from something else and we tried to figure out what.

The leading practice was “accomapanying users”. Seeing the gaps, the conclusion was their either accompanyment was useless or it was poorly defined and mastered. For some it means doing presentations in meetings, for others it’s coaching and more engaging things.

 

[quote_right]Community managers don’t have the right toolbox[/quote_right]

What we found is that these community managers, these practice leaders, don’t have the toolbox they need. That’s not new to me but the study stressed this point so much that I consider it as a key factor to set organizations in motion. We need practice leaders who are operational, who know how to drag others.

BD : One more thing. There’s been a lot of noise about Facebook at work recently. What’s your opinion ?

AR : I’m pleased they dit so so people started to talk about enterprise social networks again. If Facebook goes there, it must be a very promising market !

But can Facebook be successful on this market…? I did not try the product but, considering what we know about it they won’t revolutionize the market.

The fact it’s easy to use and that users are already on Facebook is not that valid. First, there are already lots of easy-to-use solutions and, second, I’m not sure I want to use the same tool to manage my personal and business network.

The power of Yammer does not come from its simplicity but its integration in the Microsoft World. Will Facebook be able to integrate with our business applications ?

BD : Can you imagine any business connecting its CRM and LDAP with Facebook ? Seriously ?

AR : Sure, it’s very unlikely. On the other hand, IT departments weight less and less, they don’t buy the solutions anymore and that’s a real issue.

But Facebook won’t revolutionize anything. That’s not because your name is Facebook that the enterprise market will turn into your arms. Look at Google…