By Paula Klein, TechWeb
Stephen Gillett, Starbucks’ executive vice president and CIO, may be ahead of the curve when it comes to meshing IT and marketing efforts. Not only does he try to infuse product and consumer knowledge into his traditional IT organization, additionally, as general manager of Digital Ventures, he leads a digital business unit that is rolling out emerging technologies to Starbucks’ global coffee stores.
Admittedly, he holds an unusual position. “I happen to be a CIO who has a background in Web and digital technologies,” says Gillett, who was CIO at digital media company Corbis and also held posts at CNet, Yahoo and Sun Microsystems before he landed at Starbucks two years ago. “Many other CIOs do not have this background; so there are unique synergies here,” he says.
Also unusual, according to a recent report issued by Accenture and the CMO Council, are CIOs who “get” customer issues and have a good collaborative relationship with marketing. Earlier this year, the council surveyed 600 chief marketing officers and CIOs worldwide for the report, The CMO-CIO Alignment Imperative: Driving Revenue through Customer Relevance.
The report concluded that although “customer experience is a key competitive advantage,” the marketing-IT relationship generally is “polarized and adversarial.” As a result, most businesses are not ready for true digital transformation. “IT and marketing are estranged in many companies, despite the potential to drive more revenue by working together. Much greater levels of cross-functional alignment are needed.”
“Best-of-class organizations” are striving for this alignment, says Liz Miller, VP of global operations and programs at the CMO Council, but they need to overcome organizational silos and politics to make it happen. “Businesses need to focus on bringing together their best collective expertise for the good of the customer — that’s who’s driving things,” she says.
Starbucks’ Gillett may represent the exception to the trend, or perhaps businesses are starting to heed the call. As CIO, Gillett says he collaborates on both technical and go-to-market strategies with the company’s CMO, Annie Young-Scrivner. She joined Starbucks last year from Quaker Foods & Snacks and PepsiCo, where she was CMO and VP of sales. Collaboration means IT is integrated with customer offerings and loyalty programs, says Gillett, and Digital Ventures is represented on the CMO’s go-to-market team. “You need both sides of the business to bring these efforts to life.” Additionally, a senior vice president now heads Starbucks’ Business Technology group within IT to ensure collaboration with internal business leaders.
Beyond his standard CIO responsibilities to support marketing with CRM, analytics and point-of-sales technologies, Gillett was instrumental in creating the year-old Digital Ventures effort, which is “focused on digital innovation and engagement with customers,” according to the company. The business unit launched the Starbucks Digital Network in 6,800 U.S. company-operated stores on October 20, offering mobile WiFi customers a
free in-store network to popular Web content. Yahoo built, manages, and hosts the network.
The business unit is designed to be “organizationally nimble, small and focused on creating enhanced digital experiences for the customer,” Gillett says. These are all attributes the CMO Council says are critical in applying digital technologies to business goals. “We pushed the envelope,” Gillett says of the cross-functional, nine-person team, and the unit “doesn’t ladder up to either IT or marketing.” Marketing offers guidance on issues of branding and messaging and keeping the voice of the customer, but Gillett reports directly to CEO Howard Schultz.
Other retail businesses also seem attuned to the need for marketing and IT collaboration. Cell phone giant T-Mobile in October named its former chief technology officer, Cole Brodman as its CMO, and also last month, the British fashion company, Burberry, named its CMO, Sarah Manley, head of digital marketing.
Gillett believes that melding IT and marketing is “industry agnostic,” but others may disagree. Miller, at the CMO Council, believes that the retail sector, along with the hospitality and travel industry and a few others, is particularly familiar with e-commerce and online marketing. In any industry, she says, it takes leaders with diverse backgrounds and cross-functional knowledge — and a highly committed CEO — to achieve the goals.
One sector that has obstacles to overcome is financial services. Only half of financial services firms are focusing their strategies on market-facing innovations, according to Diamond Management & Technology Consultants Inc., now part of PricewaterhouseCoopers.
Diamond’s Third Annual Diamond Digital IQ Study uncovered “a troubling trend for CIOs” across all banking sectors. While 74 percent of financial services CEOs and senior business leaders are active champions of technology, according to the study by the management and technology consultants, only 24 percent of CIOs at these firms are primarily responsible for customer-facing technologies.
“The CEO who isn’t leveraging and demanding more market-facing innovations from the CIO, and the CIO who isn’t engaging in and driving these strategies with business leaders, are both missing the mark,” according to Jeff Hesse, managing partner of Diamond’s Financial Services practice. “At risk is not only better overall company performance, but also the possibility of losing the ‘C’ in their titles.”