Why Companies Need a Chief Digital Officer

Companies are digitally innovating faster than ever as digital assets are often at the center of today's marketing and social media initiatives. The list is long but some of the significant initiatives include user interfaces, apps, social networking functions, personalization options on web pages, subscriber perks and new products and services related to digital assets.  As this inherently crosses over long standing company silos, forward-looking companies are arming themselves with a new senior executive – the Chief Digital Officer or CDO – whose purpose is to bridge the fragmented corporate environment by connecting marketing, social media, IT, research and development, intellectual property and privacy experts and other key stakeholders to ensure digital assets are being developed and utilized strategically.

For many companies that don't have a CDO or if the CDO's role is undefined, underutilized or unclear, a CMO and the marketing team have a tremendous opportunity and responsibility to help shape the role of the CDO and break down the cross-department silos that exist today in order for marketing to fully leverage and integrate with all aspects of digital.   In many instances, if marketing doesn’t take the lead in shaping the role, then IT will and it will be driven from an IT lens versus a marketing lens. While there are many functions to the role of the CDO, integrating with marketing is most central to long-term success.  Additionally, the role of the CDO can bolster marketing if cultivated in a way to integrate the many facets of digital strategy into the overall company marketing strategy.  The CDO can help bridge that gap between technology and marketing.  Without leadership from marketing in developing the role and empowering the role, digital may never realize its full potential or worse yet, spin off into its own silo and be counterproductive to traditional marketing initiatives. 

A few leading companies have already announced the CDO role. Microsoft, Starbucks, The Washington Post, Lincoln Financial, TOMS and even universities such as Harvard and MIT have restructured with a CDO.  These smart, forward-looking organizations understand the evolving role of digital in business today and recognize that having digital fragmented across groups was not effectively tapping into the power of digital strategy and assets.  For example, most CDO’s tackle building a social media engagement platform and then connecting that platform with e-commerce, wi-fi strategies (for brick and mortar outlets), mobile applications and other functions as a starting point to build return on investment for digital efforts.  Additionally, bridging offline and online experiences is essential as a first step – this inherently requires a connection to and understanding of marketing.    Recent leading industry reports show that companies now spend more on social media and apps and mobile messaging than on traditional media.  For most companies, this is a departure from past days of marketing covering everything from market and consumer research to television, product placement, couponing, promotions, print, sponsorship,  radio and other traditional advertising and marketing efforts.  Social media departments have popped up across companies or is outsourced to specialty agencies focused on Facebook, Twitter, Pinterest, web design, apps, and mobile messaging, just to name a few.  With these activities often parsed out to separate brand managers, few organizations have yet tied it all under once strategic digital roof where economies of scale and better implementation could prevail. 

In the last 20 years, we have evolved from the information age into a digital age, requiring chief marketing officers to learn a whole new language not to mention the days of big data changing every aspect of how organizations are run. Now savvy marketers recognize the valuable data and intelligence driven from digital-related marketing efforts.  As the very fabric of our lives is in the digital space, from Facebook and Twitter to Pandora, Groupon, and eBay, it is now generally accepted that most consumers are spending more time online or in mobile messaging than in any other media.  Every piece of data that we need to respond to market demands comes from a digital world.  Add to this the upcoming explosion of the internet with thousands of new generic top level domains (gTLDs) set to begin to launching this year—potentially shifting the domain name landscape forever.  The reach of digital is too broad to be housed in any existing department and warrants its own leader.  For marketing executives, now is the time to get engaged in defining that role.

The Role of the CDO

The role of the CDO is to provide strategic direction of how the company leverages its digital assets and reputation in a digital world.  A CDO works in collaboration with the CMO who is largely responsible for all marketing efforts in more traditional distribution methods and ensures that the digital strategy is in synch.  The CDO taps into data and research that may be valuable for innovation or other activities throughout the company and centralizes it into knowledge sharing tools.  Since this is the most valuable information the company is gathering (i.e. the data through digital tracking), it should be centralized and shared from top to bottom.  If this remains fragmented, then the company is likely wasting money reworking the same tasks in different divisions with varying data sets without a unifying cohesive strategy.  If marketing helps shape the role, then it ensures the ability to capture this knowledge and redirect into its traditional marketing strategy. 

In addition to working with the CMO, the CDO will cross over divides to work with the CIO and CLO and corporate communications to ensure that the reputation of the company is monitored and information is distributed, brands and assets are protected, privacy issues are evaluated and audited regularly and the technical infrastructure of its digital assets are properly developed in synch with legacy company technology.  All of these issues have exploded in a complex technical and litigious global marketplace requiring careful management of new exposure to liability and technical infrastructure.  Marketing can parse much of this out to the CDO while also ensuring an integration with its own function.  Communication across these stakeholder groups is critical, but strategic alignment is the key to success. 

CDO’s can also help a company integrate e-commerce into a cohesive strategy to utilize data to drive other marketing initiatives.  As more marketers become content creators versus just marketers or advertisers, the need for data about consumer choice is essential to drive the creation of new entertainment created by marketers for consumers.  Starbucks, for example, launched its Starbucks Digital Network to provide not only WI-FI to customers but also stream fresh, local and valuable content, enhancing the overall consumer experience, as a content curator.  Starbuck’s CDO has gone a step further into driving social innovation through job initiatives and other social movements. The CDO can also work hand-in-hand with marketing to utilize data captured through digital strategies to find, attract and engage new customers.  Ultimately, the key messaging and themes of these digital initiatives must flow into marketing messaging and strategies.

The Return on Investment of the CDO

At its core, the return on investment can be calculated with data points by determining the P&L of digital initiatives. Marketing should be involved in this modeling to ensure it does not lose its allocation of the credit for company revenues.  In addition to the traditional P&L, a few other advantages to the company include eliminating the rework and unfocused work associated with fragmentation of digital initiatives across the company.  The ability to use data analytics across numerous departments could be widely distributed to improve overall company performance.  For example the same data that helps detect counterfeiting or brand infringement can also be used to help corporate communications stop rumors or reputation management.  Or, redirecting key data points to research and development as key consumer insights for new product development, without investing in costly outside studies.  Strategy can be driven from a top level ensuring that messaging is always on track.  A CDO can also work to eliminate digital blunders with more focused strategy and implementation.  How many companies and CEOs have gotten in trouble because of a tweet, a post on Facebook or a text gone awry?  

 The role of the CDO is emerging and will become more important as the pace we live our lives in the digital world increases.  Forward thinking companies will begin to look at this as an important next step in the evolution of the corporate structure.  Savvy marketing executives will can lead the changing landscape by shaping the role of the CDO to strategically integrate and align with marketing initiatives.   

Could Net Neutrality be to innovation what AT&T’s monopoly was to Bell Labs?

As a facilitator of innovation and ideation session, I’ve always been fascinated with the history of Bell Labs. Bell Labs was once thought of as the source of most modern innovations. Their lab, after all, created the beginnings of technologies like the transistor, radio astronomy, UNIX operating system, C programming language, C++ programming language, to name just a few.   The work done at Bell Labs built the foundation for modern invention leading to phones, space exploration, the internet, music distribution, cell phones, radio and television and more. From the 1930s to the 1970s, Bell Labs in New Jersey was the equivalent of modern day Silicon Valley, laying the groundwork for future technology. Bell Labs was a separate entity but controlled by AT&T, which was a regulated monopoly by the U.S. government. The U.S. Government sought regulation over AT&T and its Bell Labs for decades, culminating in the breaking apart of AT&T in 1984.  Over the years, Bell Labs was forced to open up many of its patents. The idea was to protect the people and ensure that a monopoly didn’t form and control pricing over an important utility, the phone system. But after World War II, was this regulation really necessary? And, did it really help advance technology faster or did it slow down what could have otherwise been? Many of the early inventions at Bell Labs have led to the digital world we now live in each day. What ultimately happened was AT&T had no incentive to release its new technologies to the marketplace because it was regulated – there was no market reason to move people to cell phones even though the technology was available back in World War II – why would they?  Ironically, competitors like MCI, by sheer entrepreneurial drive found a way, regardless of government intervention to regulate or control the phone system – it had to break free to respond to market demands.

As the concern over regulation of the internet and the Net Neutrality debate has continued, I began to wonder if there were any similarities. After all, when most of us think of who the Bell Labs of today might be, companies like Apple, Google, Amazon, and Samsung all come to mind – they are developing technologies and investing heavily in new technologies that could lead to our future – a future most of us can barely imagine like driverless cars or contact lenses that project images from the internet direct onto our eyes. While some of these companies are investing more into devices and tangible assets, they all rely on the internet and free scalable use of the internet by not just their consumers but other entrepreneurs and companies who build ideas like Uber or Grubhub that further the usage of their devices by consumers. They are able to patent and protect and leverage their research and development investments in the marketplace. Would regulations that originate in the idea of Net Neutrality have the same impact of the regulation of AT&T over 5 decades? Will it further or stymie growth?

Another interesting observation, the internet began shortly after the divestiture of AT&T and Bell Labs in 1984. Prior to this time Bell Labs was the authority on networks, but their knowledge and expertise was disbursed in the divestiture. While some facet of standards may certainly be helpful to the technology backbone of the internet, government regulation may not be the way to go.  The software industry has found its own set of standards.  

I certainly don’t have all the answers, but a first step is posing the question. Regulating the telephone company sounded like a good thing at the time and probably was in those early years. Just like Net neutrality. The difference here is our society is a bit more sophisticated and the internet has flourished in the last 15 years without any regulation. While it sounds like a good thing, it is in fact, regulation, which should be reserved for ensuring safety or security of people. Will regulation now really help? Are people being harmed by a free and open, unregulated internet? If no, why is it a good idea? Will a select few benefit from this regulation? If yes, then why do so many people seem to think it does the opposite? With the changing tides of politics, this is surely a topic to be debated into the future. As with most contemporary questions, history can provide context and guidance to keep us from making the same mistake over and over.  

Can Patents Published Predict Digital Trends?

You might not think of patents as a source for SEO trends, but they can help predict what big digital and technology companies are investing in for the future and extrapolate out future assumptions about consumer behavior in searching and navigating the internet across devices and platforms.  

The U.S. moved to a first to file patent system in 2013 when the 2011 America Invents Act took full effect. This means the first inventor or company to file for a patent has priority to claim rights to that invention. Big tech companies like Google, Microsoft, Facebook, Amazon and others file patents as soon as they reach the level necessary to meet the patentability criteria. Patents can be issued on designs (remember Apple v. Samsung that was all about the design), as well as what’s referred to as utility patents. Google’s current patent portfolio exceeds 13,000 patents in force and thousands more in process, Facebook’s is 2,099 in force and another thousand pending and Amazon’s is approximately 3,500 patents issued and nearly 1,000 pending. Microsoft tops out at close to 30,000 patents in force across its entities whereas Twitter is just close to passing the 1,000 mark in number of patents in force.    

Software and algorithms on things like predictive behavior, advertising management or cataloging systems can be protected by business method patents, which protect a certain way of doing something. While there are more specific legal criteria to meet, it generally needs to be useful, novel, non-obvious and not an abstract idea or law of nature. When a patent is filed it essentially discloses publicly all the components of the invention, but offers a seventeen – twenty year (depending upon when and how it is filed)  monopoly on that invention if granted. There are other ways to protect these inventions, but patents have generally been a popular means in the digital age to try to block others or have the ability to cross-license patents if a lawsuit erupts with a competitor. This means that companies that invest in software and algorithm based technology are likely to file patents and file them before they enter the marketplace. Once a patent is filed, it begins a multi-phased process and once it is processed, it is published and becomes public record. This is when you, me or anyone can access it, read it, analyze, it or reverse engineer it. If it is patented, you can’t use that exact patent or will face potential litigation, but you can certainly learn from it. There are thousands of patents published every week in the United States Patent and Trademark Office. Looking at them one by one may not tell you a lot, but when you aggregate patents and spot trends, it can actually help you see where the digital space is headed.  

I study quarterly reports on patents published by the big technology and digital companies. I look for macro trends based upon what types of patents companies are filings and look for key themes. A few big themes in patents that have published in the last year (meaning they could be in process or issued) that impact digital include:

• Google’s Smart Home.  Google published a series of patents related to its future smart home this year. Building upon its acquisition of the Nest thermostat, Google now has the ability to manage door access and package delivery, help you manage what’s in your refrigerator or even sensing your doorbell is ringing remotely. These smart home devices, software and predictive behavior patents indicate that in the future Google may know not just what you search and where you surf on the internet, but what you eat, when you eat it and who’s at your door.  And, with their smart car, they’ll also know everywhere you go and serve up whatever information you need via their things, devices and wearables.

• The Race for the Remote.  Media and technology companies alike are preparing for the inevitable evolution of how we all view content. Netflix is building out technology to drive the remote control. As is, Verizon with a context aware remote control application. Amazon has built out its own remote control device. Apple, Google and many others are all developing similar technology. If you want to compare and contrast how they are going about it, you can read through the series of patents filed by all of them. Will this digital remote replace search altogether? These companies will all be fighting for consumer favor in the future of controlling how you surf channels on a big or small screen.  

• Predictive Behavior.  The number of companies filing patents related to predicting behavior is far reaching. This year, Amazon has patents pending on context based utterance recognition, Disney on facilitating brand integration with online content and promotion based upon user activity, Netflix on determining audience engagement indices, and Turner Broadcasting with coupons based on automatic content recognition. Apple, Amazon, Google, eBay, Verizon, Yahoo, Comcast and AOL are all just a few of the companies with patent activity pending in the all-important predictive behavior category.  

• Voice and Biometric recognition.  A big trend has been voice and biometric recognition. While the big players like Amazon, Apple and Google were all in this category, so were a few surprising companies like Hulu with a patent for augmenting video with facial recognitions.  

• Ad Inventory Management.  Adobe has filed a patent for determining brand awareness before dismissing a video ad, Amazon for ad generation based upon external traffic, Apple for content downloads and rights management using adaptive pricing with costs offset by viewing ads, Google serving ads based upon user physical activity. Hulu wants to allow users to control advertising. Facebook, Yahoo and many others have all published patents related to managing ad inventory. The way ads are served up, priced and managed will be much more dynamic and these companies can lock down their proprietary ways of doing it.  

• Cybersecurity and Privacy.  Not surprisingly, this is a continuing trend by big tech companies. Intel has a patent in process for lawful interception for device to device communication. Facebook has filings related to managing privacy settings and authenticating users via devices, Amazon is also looking for new ways to authenticate users and most of the big tech companies all had filings related to identifying unauthorized users, cross platform authentication and greater technology to improve security settings and management of privacy.  

What does this all mean? The companies I mentioned already control much of the data about all of us and many control the devices we use to access the internet whether it’s via traditional desktop search, mobile and the internet of things or social media platforms. As they converge the ability to recognize our voices or biometrics with predictive behavior and tools to price products and ads dynamically, as well as the ability to process payment digitally, the whole system could be in for a shift.  

When I look at this patent data from a macro level a big transition I see coming is the continued evolution to mobile, wearables and the internet of things like homes, cars, and the like – powered by voice recognition and predictive behavior. The patents filed in these areas show a clear trend to change the way companies engage with us in the future. This will have a trickle down impact into SEO – what will be optimized in the future may be different than what exists today.   

If social media alongside hardware companies migrate to voice recognition and predictive behaviors, will the concept of SEO change dramatically because now it is not responding to what people type into a search bar, but how they speak to Siri or whatever other personal attendant is created for us? Looking at these patents, understanding what they are doing and how they are doing it, can provide guidance to what could change in the future. If we use this as a point of making assumptions about the future, we can make smarter decisions about how we plan for ebbs and flows in an SEO driven business.  

If you want to track patents, Google Patents provides a free service and a fairly intuitive approach, but not analytics – that’s up to you. Google’s service also includes international fillings (though the rules vary across jurisdictions). The USPTO is the direct access database for all patents filed in the U.S. and does allow for some filtering and advanced search capabilities. I use Black Hills Technology to build out specific portfolios and track key words and categories, but I pay a license fee to access that system and analyze patent filings at a much deeper level than what the free software allows.  

While patents as a single source of data are not going to give away the secret sauce of SEO in the future, it’s an important tool to understand what companies are investing in and what could be the future of digital.