A New Frontier: The Chief Digital Officer In Healthcare

September 27, 2017
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By Tony Leng, Managing Director and Practice Leader at Diversified Search / AltoPartners USA

Disruption, we know, is the new keyword gripping the global marketplace. But of all the sectors in the world economy, it is healthcare that will undergo the most pervasive digital transformation. Thus far it has lagged, but the opportunities and demands are so great that it must now move forward quickly to grasp the opportunities that technology brings. Advances in technology, interoperability, shifting risks, and consumer expectations are creating a perfect storm of new entrants and internal disrupters that will upend the status quo. Moving to value across the continuum of healthcare will require levels of sophistication in thinking and action beyond what many organizations are currently equipped to handle.

The question all providers and payers must ask themselves is this: How are we dealing with the opportunity of digitization? There is no organization in the healthcare field that is not being impacted—both at the “core” and “edges” – through rapid advances in technology and connectivity. These impacts will enable new business models to evolve and necessitate the advancement or replacement of outdated practices. My definitions:

Core = your internal processes.

Edges = data that is external to your core, is customer/patient related, and hugely impactful.

Core and Edges eventually merge into a Platform – which your CDO should build toward.

Digitization = Big Data/Analytics, AI/Machine learning, Cloud, Mobile, Social, IoT, NLP, Bots, Telehealth, etc. – in other words, all the really cool stuff happening in the world today. These technologies allow you to assemble a clearer picture of your operations and your customers while simultaneously enabling more precision and agility in response to insights you might derive.

The challenge many CEOs face is that everyone on his/her team wants money for technology – the CIO, CFO, CHRO, CMO/CMIO, Marketing, Operations, the list is endless. Their potential initiatives all have great ROIs, and seem plausible, but there is not an endless supply of money to fund them. So how do you decide what to do, who goes first, and not end up with stranded investments? The CEO turns to us to help him/her think this through, and the discussion turns to a CDO – or Digital Transformation Exec (call it what you will).

My view is that the Chief Digital Officer is actually the CEO and team. I don’t think it’s a new function (like a CMO, CFO, CHRO); it is a digital way of doing business, and goes to the core of every organization’s business model. The problem is that most CEOs are not digitally literate, and so the CDO becomes the CEO’s “proxy” for the digital transformation that all companies are addressing. So, it is essentially a transition role: helping an organization go from analog to digital, and once done, the CDO should take a role on the Senior Leadership Team (SLT), or move on. In healthcare, this “transition” can last seven-plus years.

What does the CDO do?

  • First – get a few quick wins, but like all transformations, s/he should have both quick digital wins and also a long- term strategic agenda. A win could be a consumer app, telehealth initiative, etc.
  • Core activity. Understand how digital can change core processes. (AI, bots, etc.) I can’t wait to see how Amazon rethinks the core processes of Whole Foods. For healthcare, an example would be using data (internal and external) to help with diagnosis so doctors can spend more quality time with patients. How would digital enablement of your core processes accelerate your ability to respond to regulatory, reimbursement, or other market shifts?
  • Edges. There is often more customer data outside the organization than inside. How do you partner, ingest external data, and create algorithms to assist in delivering value? How will new entrants threaten the edges of your value chain?
  • Interact with and engage customers the way they want. Web, mobile, social, augmented reality, bots.. How will your members or patients engage you virtually, and how do you create sustainable and sticky relationships to keep them actively engaged in their own health?
  • Craft the digital roadmap. This is the long-term strategy and involves technology, business processes/architecture, and generally educating and helping the SLT see how the business might transform. You’ll need a capability model to frame your decisions and navigate the ever-increasing number of offerings from partners and competitors alike.
  • Ensure that the digital roadmap supports the core purpose and goals of the organization as articulated by the SLT. It is important that the CDO work in collaboration with other members of the team, as this role may be perceived as threatening and disruptive. The nature of today’s market necessitates this be an ongoing conversation, not a yearly planning exercise.

S/he can have the CIO report in, be the CIO as well, or sit outside IT. What you don’t want is for the CDO just to be a glorified CIO and get sucked into IT stuff all of the time. Fundamentally, this job will require focus and velocity beyond a normal operational cadence. What does a CDO look like? What is the best background for her/him to have?

Here are some thoughts:

  • Ability to lead transformation – horizontally. As seen above, the CDO must digitize the core as well as the edges. A systems thinker.
  • Ability to articulate a strategic vision.
  • Technical chops to understand and evaluate tech trends and see how/where they might fit. Need the ability to articulate a corporate digital roadmap and architecture. Communication/evangelism/charisma. All organizations are becoming tech organizations and the CDO must have the ability to inspire his/her peers to see the benefits of moving toward this new reality.
  • A background rooted in some type of digital consumer-oriented business. Preferable is for him/her to have led a digital transformation in such an organization. Second is to come from a pure play digital business; she/he will “get it,” but won’t have gone through the learning of a transformation.
  • Patience, organizational savvy, and fortitude. To understand how to manage and push through on the change agenda. This means collaboration with peers, and support and buy-in from the CEO. Consumerism. We all experience daily the Apple user experience with Amazon fulfillment/backend – it’s what we have now come to expect from everyone we deal with. The best candidates have been key players on this digital journey – and understand where both the opportunities, and the road bumps, are likely to be found.

Tony Leng is a managing director at Diversified Search, one of the top ten retained executive search firms in the U.S. Based in San Francisco, Leng leads Diversified’s CIO Practice. You can reach him at 415-354-2154, or Tony.Leng@divsearch.com.

Tony Leng
Managing Director and Practice Leader AltoPartners San Francisco