The rise of the Chief Digital Officer: framing the future of digital leadership

Digital disruption is the word on the lips of almost every organization, with 65% of business leaders anticipating its impact as “significant” (Harvard Business Review [HBR] 2016, p. 3). Tasked with harnessing the pace of digital transformation, the Chief Digital Officer has emerged as a key player in the C-suite. But, who is the CDO? What do they do? And are all CDO’s the same?

These questions were recently explored by Doctoral Researcher Tumbas  and Professor Jan vom Brocke (University of Liechtenstein) and Professor  Nicholas Berente (University of Georgia). In essence they found three very different types of CDO – the Accelerator, the Marketer and the Harmoniser – reflecting different organizational needs and maturity.

Aim

The aim of the research was twofold, namely to:

  • identify successful approaches to the CDO role
  • help organisations decide if they should appoint a CDO.

Methodology

The researchers conducted a series of cross-industry interviews with 35 CDOs world-wide across a broad range of industries in both the private and government sectors. Interviewees were asked a series of open ended questions such as “Why did the organization create the CDO role? What are the tasks and responsibilities of the CDO? What kind of outcomes do CDOs drive?”

Findings

The researchers found the “the core reason organizations appoint a CDO is to drive business value from digital technologies”, and all CDOs are “responsible for questioning the existing business model and evaluating customer-centeredness, using a variety of data to gain insights”. Nevertheless, not all CDOs are cut from the same cloth and the researchers identifies distinct approaches to digital leadership depending on where an organization sits on the spectrum of ‘doing digital’ to ‘being digital’. They found three types of CDO:

  1. The Digital Accelerator with a focus on digital innovation
  2. The Digital Marketer with a focus on analytics
  3. The Digital Harmoniser with a focus on customer engagement.

 

  1. The Digital Accelerator (focus: digital innovation)

These thirteen CDOs:

  • Are defined by their ability to achieve fast results through continuous experimentation
  • Look at areas of digital innovation in relation to strategy, organisational processes, products, services, and business models
  • Are often seen alongside existing IT leadership, who are able to focus on operational and mission-critical activities
  • Work freely and flexibly, experimenting with new capabilities at the edges of the core business.

An example of the focus on innovation was expressed by a CDO in Media Publishing: “I think my largest problem is … how can you transform a business model from the print age. … I think this is the hardest challenge: how do you do that step-wise in a certain amount of years [while] protecting the business you already have but also building a new model.”

  1. The Digital Marketer (focus: analytics)

These eight CDOs:

  • Look at how internal and external data sources can be used to improve performance
  • Understand what data can do, and lead data analysis across the business
  • Help the business develop customer intimacy through technology
  • Streamline methods to engage with customers, and to enhance products and relationships
  • Create a consistent experience across digital and non-digital channels
  • Can be a transitive role while the organisation establishes a digitally enabled marketing function.

An example of the focus on analytics was expressed by a CDO in Architecture/Design:

“With one of our design businesses—designing hotels, resorts and such—we were able to look at … Trip Advisor for … reviews of the facilities that we designed. … We’re also looking at ways [of using] something from Trip Advisor. What is public data, what can we use from that and how do we do it? Likewise with design forums or discussion groups and [so on]. Those are the … non-structured data sets that we’re interested in understanding: what’s the general conversation, what’s the general pulse?”

  1. The Digital Harmoniser (focus: customer engagement)

These fourteen CDOs:

  • Take an “aggregate view” of all digital activities across the organisation and ensures they align to strategic objectives and acts as an intermediary
  • Look at how digital technology can enhance customer experience
  • Introduce digital governance and creates transparency across functions
  • Take the lead in organisation-wide digital transformation and elevates digital concerns to the C-suite
  • Create connections, builds integration, dismantles business silos, and drives digital innovation.

An example of the focus on customer engagement was expressed by a CDO in a Software company: “In healthcare, our customers [are] pharmaceutical companies, doctors and patients. Their expectations are changing from analog services to digital services. As a result, one of the things that I do is study my customers’ customers’ needs so that I can anticipate as a vendor what I should be supplying them with. In many ways, I’m studying patient needs and … doctor needs to figure out what pharmaceutical companies are going to need so that we become the … next generation supplier.”

Implications

The researchers concluded that the CDO role is central to innovative digital transformation. They recommended that organisations wishing to drive innovative digital transformation must create an executive level role to fulfil this function: it may result in the appointment of a CDO, or could result in broadening the scope and capability of the Chief Information Officer (CIO), Chief Technology Officer (CTO), or Chief Marketing Officer (CMO) role.

Should an organisation appoint a CDO?

CDOs own and drive digital strategy, and bring the digital agenda to the C-suite. Research from Korn Ferry shows that organisations which lead the way in digital transformation are better positioned to develop and retain talent, manage change, and drive innovation (Korn Ferry 2016, p. 6).

A CIO or CTO may already be performing a similar role: 52 per cent of organisations surveyed by the HBR stated that the CTO or CIO is currently leading digital, with only 16 per cent stating they have a CDO in place (HBR 2016, p. 13).

There are clearly crossovers between these roles, but a CTO/CIO may lack the capability, the capacity, or the support to perform the role successfully. According to a study of 680 executives across functions and industries, only a third of respondents think that “IT can align digital interventions to business outcomes” (HBR 2016, p. ii).

The future of digital leadership

The authors argue that strong digital leadership will help organisations move from ‘doing’ digital to ‘being’ digital. Successful organisations will move faster, incorporate innovative and agile ways of working, and empower digital leadership at the executive level, and beyond. The value of this research is to help organisation’s identify with greater clarity their level of maturity and thus the specific type of CDO archetype which will add the most value.

To read the full article, see Tumbas, S, Berente, N, & vom Brocke, J 2017, ‘Three Types of Chief Digital Officers and the Reasons Organizations Adopt the Role’, MIS Quarterly Executive, vol. 16, no .2, pp. 121 – 134.

References

Tumbas, S, Berente, N, & vom Brocke, J 2017, ‘Three Types of Chief Digital Officers and the Reasons Organizations Adopt the Role’, MIS Quarterly Executive, vol. 16, no .2, pp. 121 – 134.

Korn Ferry 2016,  Rebuilt to last: The journey to digital sustainability

Harvard Business Review 2016, Accelerating the pace and impact of digital transformation: Full Report


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