A Digital Mind: The Emergence of the Chief Digital Officer

Digitization shapes our everyday lives. As it is comparably easy for end users to switch to new apps and functions simply by updating the version or buying a new device, it is a much bigger stretch for companies that have to make the move from back office IT into the digitized economy. What does it mean for enterprise leaders to lead companies into digitization? In this article, we will have a closer look at whom should be driving this profound change.

Digitization has put us in an ever-changing environment and the fast pace of today’s technology innovations sets new standards. That’s why every company needs – besides a good digitization strategy – a manager who transforms upcoming opportunities created by digitization into revenue. Somebody who is able to drive competitive advantages or create new business models based on emerging technologies. An evangelist who forces innovation and creates next-generation digital touchpoints where customer meets business.

Welcome to the emergence of the chief digitization officer (CDO)

Implementing the role of a chief digital officer is not a common theme for everybody yet – but it should be. Within the next few years, the role of the CDO will become a minimum requirement to survive intense competition within the industry. Before we dive deeper, lets have a look at our status quo.

Gartner analysts claimed six years ago that by 2015, 25% of large organizations will have a chief digital officer. Although their expectations were not quite met (only 19% worldwide in 2016) recent studies showed huge regional differences for this job position –  38% of companies in EMEA region have a designated CDO or equivalent in place, followed by 23% of companies in America and 7% of companies in Asia-Pacific. Interesting to know is that 60% of roles for CDOs have been appointed since 2015 – a comparably short time to shape company’s digital customer experience. Industry-wise, insurance shows the highest rate of digital leaders (35%) followed by Communications & Media (28%) and Banking (27%). Surprisingly, technology and electronics industries show a comparable low number of dedicated CDOs (14%) as one’s could suspect as they strongly rely on IT-innovation.

Source: A study of PWS, 2017 https://www.strategyand.pwc.com/company-demographics

A Quest for Growth

A dedicated role is needed within organizations to drive the strategic and operational implementation of a digitization strategy and to develop new digital platforms and tools. As CIOs and CTOs typically focus on shaping business that utilizes technology and data, these roles are not digital-native. In contrast, a CDO drives cross-functional digital initiatives. A CDO translates digitization strategies into various initiatives to align IT ecosystems and data with service delivery and its underlying processes. The workplace needs to be technical-driven and process-oriented to bring the digital strategies to life. In fact, a CDO would be some sort of specialized change manager with a key position across all business units, who is dedicated to innovation.

One of the biggest advantages of having a CDO in place is that companies would drive more digital initiatives and employees would be encouraged to makes the necessary changes to stay successful.

Acknowledge the Digital Potential

Companies rely on their digital strategy, however, less than 40 percent of them have the accountability or understanding of the actual potential value. This puts everything at risk – revenue, jobs, and company value. With a CDO in place, who constantly aligns strategies with technological opportunities, companies will have more means to succeed and to innovate.

In terms of digital touchpoints connecting businesses and customers, creating cross-functional IT ecosystems through system integrations and technologies will play a key role to adapt to fast-changing customer behaviors and interactions. Gartner stated that by 2020, already 90% of customer service will happen through social media. If so, marketing teams would need to share social channels with support teams who themselves need access to CRM data as well as back end systems e.g. billing, payment, delivery etc. Besides system integration, proper strategies for security, backup and disaster recovery form the basis to assure modern data protection standards and eradicate data abuse. For example, we could continue with installing better collaboration platforms for employees to increase efficiency or enable automation wherever possible.

Authors of strategy+business state, “In the early days of a business, different business units and corporate functions conduct scattershot experiments and pilot programs in hopes of kick-starting their digital efforts. But once a company decides to design a coherent, comprehensive strategy to capture the benefits of digitization, that decentralized approach will no longer suffice.”

Overall, companies with legacy IT usually face higher obstacles compared to digital natives. That’s why they need is a person who drives this technological change focusing on systems, data and processes.

Or like Garry Hamel would say:

Innovation is the only sustainable strategy for creating
long-term value.