Digital technologies have changed the landscape of customer experience and operational efficiency and created the need for digital transformation (DX). In order to keep up with the pace of business, customer demand and market conditions, the role of chief digital officer (CDO) has been created.
In today’s world, digital strategy has to become corporate strategy. The responsibility for those with this role is to achieve digital and therefore business transformation by ensuring that the appropriate new technologies are implemented and then successfully adopted within and outside the company.
Often, the CDO reports to a CIO. And the CDO is often reduced to carving out a precarious existence in an environment that is not well-defined and usually not properly committed to. The CDO may not be set up for success and may be stuck between warring factions with little air cover. So, what is a CDO to do?
Typical CDO Responsibilities
The CDO is expected to drive the adoption of relevant digital technologies across the business. So, they need to be a digital guru as well as an adept general manager. While most businesses struggle with putting the customer at the center, DX is only accomplished when both sell-side and production/supply chain can be synced digitally. Usually, turf wars erupt and a CDO is isolated to sell-side, where they can make war with just the CMO and CRO.
The Beginning Is A Problem
Why create a CDO who reports to a CIO? Mainly because adding another VP of IT who has neither the power nor the dramatic title required for transformation will not cut it. Also, all things digital somehow seem to fit underneath a CIO. Unfortunately, the CIO, who really should have created such change by now, is unsuccessful because of an IT culture that is horribly resistant to the rapid change needed. This is why today’s CMOs have up to 100 external applications using customer data that the CIO has no jurisdiction over.
A CDO is hired to transform and future-proof the business in an increasingly digital world. However, in my opinion, naming anyone a C-level officer without giving them appropriate P&L is an exercise in futility. No CDO who either is tied down under a CIO without an independent budget and revenue responsibility or has to constantly worry about overstepping remit by crossing over into innovation or marketing or data can accomplish what is needed. Many a CDO I know is stuck between marketing and IT, building business cases or writing requirements with no authority to actually build or change anything.
DX Is Really Difficult
Business transformations are generally difficult, but DX has some peculiarities. Among the many challenges at each stage are:
• Setup: Getting the board and the C-level to agree on key business objectives in the language of revenue and growth metrics and setting up a culture of collective entrepreneurship that does not dissolve in finger-pointing and turf wars is paramount. These are not up to the CDO alone. The CEO and the board must help. Clarity on the part of the CEO and board will drive everything — from the expected results, to who owns what, to when digital platforms should be available.
• Execution: Avoiding savantism in build or buy decisions for digital tech and effectively managing change across both internal and external stakeholders are incredibly important factors. The CDO will need a lot of air cover and allies to do this. The CIO and CMO need to follow and make the digital culture the CDO might bring successful.
• Sustaining: Regime changes usually mean going back to the drawing board and throwing away progress. Not having a perspective on the continuous change required by the fearsome pace of digital advances means there is no future-proofing. The CDO needs to be forgiven for minor failures and kept on for upcoming change. The CEO and the board need to ensure that short-term business dynamics do not interfere with longer-term transformation goals.
If all of the above were somehow sanctioned, then comes the question of who maintains or enhances this new digital realm once some of it is built. Users and operating teams will object to constant change and find it difficult to keep up. The CIO will demand security and ease of upkeep. Will the CDO have to CIO his or her own tech? Is a division of labor possible where built and utilized tech is handed off to the CIO for upkeep while the CDO forges forward? Who will sustain change management across all of this?
The CDO can only succeed if they are empowered with the following:
• Reporting directly to the CEO and the board to sustain strategy and long-term plans.
• P&L responsibility that follows the expected business transformation goals with revenue incentive. This means a sales responsibility and team along with a tech team and connections to product/supply side.
• Capital expenditure allocation to acquire and/or build technology with approval process that has a way to break deadlocks and turf wars.
• A change management team that reports to the CDO.
• A focus on long-term planning that might accommodate lessons learned or mistakes made.
What If A CDO Succeeds?
The most immediate direction a CDO can take is to stay and continue change and future-proofing. One natural next step after bringing in new digital systems is for the CDO to succeed the CIO. In some cases, a CDO might become so focused on the customer side that they could become CMO. Eventually, the CDO will deal with customer and operational data and could succeed into a chief data officer role. There are also those who predict a new role of chief transformation officer will be created as the CDO role dies (paywall). However, if a CDO or even transformation officer successfully transforms processes across the business, they are ready to be CEO!