As businesses strive for digital transformation, in recent years a new executive role has emerged: the Chief Digital Officer. The evolution of the CDO has been much talked about, but what is its current state of play?
A recent report by Strategy&, The 2015 Chief Digital Officer Study, analysed 1,500 of the world’s largest companies to find that globally, only 6% have hired a CDO or equivalent.
That figure, I suspect, could be higher. The remit of a CDO is still so broad: is it equivalent to a Chief Customer Officer, or is it to act as Chief Transformation Officer, for example? This grey area of definition means there may be overlap into other roles and the true number harder to pinpoint. Certainly, in PwC’s Global Digital IQ Survey of October 2015, when asked who drives their company’s digital efforts, 14% of respondents said it was the CDO.
Whichever figure you choose, they are still a way off the predictions. In 2013, Gartner believed that a quarter of all companies would have a CDO by 2015. We haven’t arrived there even a year later, however the rate of growth is high: 36% of CDOs were appointed in the last year, says the Strategy& report, and 80% since 2012. So the CDO club is growing swiftly, particularly in Europe.
As a new position, it’s too early to accurately measure performance. However the Digital IQ Survey did reveal that companies in which digital leaders play a part in setting the strategy are among the most financially successful – signifying that digital acumen at the top does provide value.
It is still CIOs, however, that predominantly lead all digital efforts. The Digital IQ Survey saw this in 40% of companies but that number is expected to drop to 35% in three years’ time, balanced by the increase in CDO appointments.
cultivating a CDO
Currently, larger companies are more likely to form a CDO role, because in more complex environments there must be an appointed champion of change, but also because financially, smaller organisations may not have the ability to create a standalone role.
It’s perhaps unsurprising that consumer focused industries are most likely to employ a Chief Digital Officer. Thirteen percent of the largest media, entertainment and communications companies, for example, have a CDO. What really takes the lead is travel and tourism, in which (when you exclude transport companies) almost a third of the largest businesses have a CDO in place.
These are competitive industries in which customer experience is a priority, meaning there is greater motivation to digitise. This goes hand in hand with the discovery that, although CDOs come from a variety of backgrounds, most arrive through the route of marketing (34%) or sales (17%).
Marketing may present the right skill set when it comes to lifting the immediate sales of the business through digitisation – which of course consumer-facing enterprises will want to do – but the CDO role must go beyond that, to encompass full transformation (a topic I explore in another article).
On the flip side, technology companies are least likely to have a CDO because ‘being digital’ is already part of their DNA. This is where the transformational element again comes into play: we wouldn’t expect Uber to have a CDO, for example, because it’s not an enterprise that needs to transform.
Digitisation is not just about the consumer, however. The imperative for B2B companies to digitally transform is becoming considerably stronger. From the use of enterprise oriented apps to operational technologies that enhance efficiencies or enable better collaboration with suppliers and partners, a CDO is increasingly likely to be appointed to drive internal transformation too.
The CDO landscape
In Australia, CDO appointments tend to emerge from the CIO role. There is of course a diverse spread in the position’s definition, but in Australia organisations tend to see it as a focus on technology and how that can be used to drive change.
CDOs of banks, for example, will often derive from technology channels. Australia also has a number of CDOs appointed into government positions. Again, Gartner’s predictions – that by 2014 20% of government organisations will have a CDO – are a little way off, however ACT’s public service, Brisbane City Council and the City of Melbourne have all made space for the role among their ranks. What’s interesting about this is that digitisation of local government has a strong physical piece, because of the amount of digital assets. Take transport, for example: from toll roads to parking meters to access of public venues, the role of digitally enabling such public assets requires a heavy focus on technology and the ability to analyse the data that comes with it.
for the CDO?
Whether currently aiming to increase marketing or sales returns, or enabling a city to become better connected, the CDO’s role is fundamentally about driving the digitisation of business models rather than performing an operational function.
The ultimate aim should be for digital to become the core capability of the business rather than the transition to a different way of working. Of course, there may be other evolutions or changes that need to take place beyond that, but will those changes be the digitisation of the business or something else?
This leads to the assertion that the CDO is a transitional role, in which a successful outcome means to have performed oneself out of a job. By the end of the term, the CDO should have sculpted an organisation that is more agile, more enabled, more digitally focussed and more connected – and therefore, once that’s been achieved and digital is a core capability across the business, there is no longer the need for a dedicated role to drive it.