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Energy Companies Need More Digital Executives: Nathaniel Bullard


These translations are done via Google Translate
Apr 5, 2019 by Nathaniel Bullard

(Bloomberg Opinion)

A recently published Strategy& study examines the role of “chief digital officer” in the world’s 2,500 largest publicly listed companies. Chief among the consultancy’s findings: 2016 “was the high-water mark in CDO hiring” (though their 2018 data run only through the first quarter of the year, a spokesperson says). One reason for that peak, the study’s authors say, is that “as transformation becomes part of the core business, the next step will be for the CDO to disappear.” Marc Bain noted in Quartz that these days, becoming “digitally fluent” is “the responsibility of the entire organization.”

It’s a useful study, and digital transformations will be companywide and probably become a matter of culture as much as a matter of specific, defined implementation of software and processes. But drawing on insights from a BloombergNEF survey completed last week, I’m not so sure that the role will disappear quite yet.

According to Strategy&, in 2014 only 2.5 percent of oil, gas and utility companies it surveyed had a chief digital officer. Last year, that figure was 14.4 percent, below the global average of 21 percent. So even if chief digital officer roles are going to hit a peak in large energy and utility companies, there’s probably room to add more of them before hiring slows or stops.

BloombergNEF’s survey on utilities and innovation helps highlight the challenges these chief digital officers will face. My colleagues posed two questions on digital innovation to the audience at the BloombergNEF New York Summit last week. The first question was about barriers. Half of those surveyed at the BloombergNEF summit said the biggest barrier to innovation isn’t a lack of understanding of technology, or applications that aren’t fit for certain purposes; rather, the biggest barrier in a highly regulated industry is … regulation.

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However, departmental “silos” of operational groups unwilling or unable to coordinate with each other was ranked as the biggest barrier by 38 percent of respondents.

How can a company cut through silos, particularly when “innovation” means ever-more digitalization of existing processes — as well as new ones and even new, digitally based business models? In theory, that’s a job a chief digital officer can and should be doing. And that’s where another survey result is instructive. Asked which companies should supply Internet of Things and artificial-intelligence capabilities to utilities, nearly half of respondents said startups should be the providers; many more said that industrial equipment companies, such as General Electric Co., Siemens AG and Schneider Electric SE, should provide digital technology.

Chief digital officer hiring might be tailing off, but the chief digital imperative for big business, so to speak, is only increasing. Established businesses need to become more digital. But if they also need to do so using vendors and partners who are small and specialized, they can really only do so with expert leadership.

We might be at the high-water mark for chief digital officer hiring, but I doubt we are close to it in the role’s significance for big business. Certainly, companies need to embrace digital technologies at all levels and across groups, even if they aren’t creating these positions. That embrace is more than a hiring plan; it’s a change in the way companies think about technology. But there’s a place for digital expertise at the very top, too. All the more so when the biggest and oldest corporations in the world are to engage directly with some of the smallest and youngest.



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