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Digital is becoming a cornerstone of competitive advantage and innovation for all businesses, so no one should be surprised that a new dedicated c-suite role, the chief digital officer, is being offered up as the key to success.
In this article, we look at 8 facts about the current state of the CDO role, what makes CDOs tick, and the significance this increasingly widespread position has for both the CMO and CIO.
1. The CDO role is on the rise
A swathe of research released globally over the past year highlights the rise and rise of the CDO. Gartner predicts that by 2015, 25 per cent of companies will have a CDO managing their digital goals, while McKinsey and Company’s annual global survey released in September,Bullish on Digital, shows 30 per cent already have a CDO on their executive team.
According to the CA Technologies' Digital Enterprise: The role of the CDO study released in September, 47 per cent of Australian business leaders believe the role of the CDO is becoming more important to their business, and 45 per cent claim to already have a CDO. Fourteen per cent expect to fill the role in the next few years.
This is a far cry from just two years ago, when new founder, David Mathison, claimed just 75 CDOs existed worldwide across major organisations.
2. The definition of CDO is in a state of flux
Knowing exactly what the CDO does isn’t quite so easily agreed on. When the authors of CA’s research report looked to define what a CDO’s responsibilities are, responses proved mixed. For example, when asked for who they’d turn to for advice on mobile and app development, respondents were split between the CIO and CDO.
There are also suggestions the CDO role is a temporary measure as organisations transition into fully digital businesses. Gartner is one organisation who believes this, while MIT Center for Digital Business research scientist, George Westerman, sees the title ‘CDO’ as both a temporary and permanent measure, depending on the business need.
In a recent Harvard Business Review blog post, Westerman pointed out digital is currently “a cacophony of disconnected, inconsistent, and sometimes incompatible activities” in many organisations, and the role of CDO is to unify the discordant sounds “into a symphony”.
“The title CDO may or may not become permanent in your company. But the responsibilities of the CDO will be required,” Westerman stated. “You may appoint a temporary CDO to get your house in order, or you may develop other ways to get the job done. Whatever approach you choose, you need to create appropriate levels of digital technology synergy, brand integration, investment co-ordination, skill development, vendor management and innovation over the long term.”
Gartner’s general vice-president of executive programs, Mark McDonald, also believes CDOs aren’t created equal and will need a different approach depending on whether they’re primarily focused on either a revenue/policy axis or a staff/line.
He in fact suggests there are four types of digital leader: Chief digital marketing officer, focused on brand, building demand and growing customer experience; chief digital business officer, focused on generating revenue from digital products and services; chief digital strategy officer, focused on commanding policies from a staff position; or chief digital champion officer, running the resources that deploy digital strategy.
3. Digital is still everyone’s business
Digital is influencing every facet of business and those that haven’t recognised it yet are living in the dark ages. According to Deloitte Australia, digital is disrupting the way every organisation innovates and interacts with customers, and no one is immune. The company’s digital map of the Australian economy released last year, undertaken in conjunction with Access Economics, found 32 per cent of Australia’s economy will be seismically disrupted by digital, and the rest of us are in for big changes too.
Deloitte Digital practice leader, Steve Hallam, identifies five game-changing trends behind digital’s rise: Mobile, analytics, cloud, social and cyber. CDOs will be a critical part of bridging this gap within organisations and identifying ways to utilise digital both for customer insight/relationship, and competitive advantage through new business models.
4. Government is in on the CDO trend, too
It’s not just marketing agencies, big business or broadcasters getting in on the CDO act – it’s government and non-profit agencies, too. According to Gartner, more than 20 per cent of government departments worldwide will appoint a chief digital officer as part of their digital strategies. The group’s prediction report, Beyond the Government CIO: Chief data or digital officers?, also forecasts 10 per cent of government organisations will have a chief data officer by 2014.
However, as was reflected in point 2, Gartner suspects this CDO recruitment frenzy may be a short-term phenomenon. By 2017, the group estimates more than 60 per cent of government organisations with a CIO and a CDO will eliminate one of those roles.
5. CDOs may or may not be the CIO
Debate rages around whether CDOs will replace CIOs or sit as a separate management function. CA’s report stated the rise of the CDO is likely to see many of the technology-based roles traditionally held by the CIO being integrated the new c-level title. But this view isn’t shared by George Little Management’s first CDO, Jason Brown, who claimed the responsibilities of a CIO and CDO diverge sharply.
“The role of IT in the past has been to procure and secure IT equipment for the company, lock [data] up and bolt it down,” Brown told CMO’s sister publication, Computerworld US.
“I'm interested in building products that can be monetised. Companies need to look at their products and see areas where they can make money digitally.”
MIT’s Westerman is a little less convinced the roles are so distinct. “You need to get the digital leadership job done, whether through a new c-level title or other methods,” he said in his HBR blog post. “If you have a great CIO, give her some digital responsibility. You may not choose to make her your digital leader. But the skills and relationships of a great CIO will be an asset to any digital leadership team.”
The principle of business consulting at Infosys Lodestone, Tarique Amin Bhuiyan, is adamant CDOs are next-generation CIOs. In a LinkedIn post, Bhuiyan argued it was time for CIOs to step aside and let CTOs run the technology show, while CDOs take over the traditional CIO role in terms of digitising the business. These next-generation CDOs could come either from IT or marketing, he said.
Guest contributor to the Wall Street Journal, Irving Wladawsky-Berger, agreed on the shift from CIO to CDO: “The CDO succinctly captures the future direction of the CIO role," Wladawksy-Berger stated in a blog post late last year.
6. Leadership is core to the CDO agenda
McKinsey Bullish on Digital report authors, Brad Brown, Johnson Sikes and Paul Willmott, believe leadership is the most decisive factor for a digital program’s success or failure, and therefore will be at the heart of the CDO role. “Increasing c-level involvement is a positive sign, and the creation of a CDO role seems to be a leading indicator for increasing the speed of advancement,” the trio commented. “These developments must continue if companies are to meet their high aspirations for digital.”
In a sign that this new role is already creating value, respondents whose organisations have a CDO also indicated significantly more progress toward their digital vision than those without one, McKinsey reported.
Recruiter, Russell Reynolds Associates, has also put together its own list of key skills required by the successful CDO. These include e-commerce and transactional experience, online marketing and social media expertise, transformative product and technology capabilities, and a general tech savviness.
“Importantly, the CDO is not only a digital guru, but also a seasoned general manager,” the recruitment firm stated in its manifesto on the rise of the CDO. As a result, change management, strategy insight, P&L experience and building relationships are all vital characteristics of these modern-day executive leaders.
7. CMOs want to own digital strategy, too
Given how important digital strategy is, it’s not surprising that chief marketing officers (CMOs) want a piece of the action too.
In CMO’s recent series on who should own digital strategy within an organisation, The Co-op’s CMO Greg Smith said CMOs should hold the digital reins: “CMOs must have insights into IT, digital and the customer, and if we’re going to implement and use smart decision making, then we need to have smart data, smart systems and smart teams.”
Well-known CTO of ion interactive and regular CMO blogger, Scott Brinker, also believes CMOs who aren’t in charge of digital, aren’t in charge of marketing.
“All businesses are now digital businesses,” he said in a recent blog post. “As CEOs in these organisations face this daunting transformation, a number are seeking a shortcut to digital mastery by creating a new c-level position: The chief digital officer (CDO). Reporting directly to the CEO, the CDO is given tremendous latitude to shape the new digital incarnation of the company. Essentially, their mission is to understand and connect with the digital customer.
“But the hiring of a CDO is just as likely a vote of no confidence in the CMO, because the technology aspects of this transformation are really just a means to an end. The real goal of digital transformation is to keep pace with the customer. Hiring a CDO seems to acknowledge that the core business's marketing department has failed to do that.”
8. CDOs probably won’t usurp CMOs
While there has been speculation that CDOs could be stepping on CMO turf, it’s unlikely that CDOs will actually usurp the CMO role. Partner at executive search firm The MBS Group, Mike Roberts, told Marketing magazine UK that although there is increased demand for chief data and digital roles, the CMO position isn’t going to become extinct. He saw the CMO and central marketing roles being expanded, even as more organisations look to bring on a CDO.
News UK’s new head of business intelligence, Andrew Day, also believed marketers should embrace the shift. “It’s not a land grab,” he told Marketing. Information and data is power, and other lines of business are recognising this, not ruling it, he added.
Forrester researchers, Martin Gill and Carrie Johnson, say now is the time for CMOs to make sure they embrace digital not as a strategy, but as a cornerstone of their brand and organisation’s DNA. In a post on AdAge, the two argued CMOs shouldn’t hide behind a chief digital officer and get on-board the digital train to ensure they continue to meet the needs of the modern customer.