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Rise of the CDO (Chief Digital Officer)


April 22, 2014

Most large companies and corporations have a CIO (Chief Information Officer), a CMO (Chief Marketing Officer), and a COO (Chief Operations Officer). Because they represent separate departments with separate budgets, each often has separate goals and initiatives. They have separate employees and work in separate offices and receive separate evaluations. Sure, they are expected to be good neighbors and so, they collaborate over their virtual fences when necessary. Yet, all too frequently their interests are also separate. Separation leads to ownership and ownership can lead to protectiveness and protectiveness to stagnation.

A relatively new role has emerged just below the c-suite– the Director of Digital Strategy, who is charged with overseeing a company’s implementation and use of digital technology. While this is a good idea and has proven to be an effective position, I think it hits the target but misses the bull’s-eye.

At the intersection of IT, Operations, and Marketing is your company’s “Digital Maturity,” which is an indicator of your likelihood to successfully innovate. How well your company leverages technology to enable efficient operations, develop products and services, and market through digital media are important to this assessment. But, how well these functions are integrated is the key to successful integration. Once you recognize that these functions are not really separate, but, rather, parts of the same, you can unlock greater efficiency, profitability, innovation, and competitive advantage. Thus, I give you the CDO (Chief Digital Officer), charged with the overall digital strategy and the evolution, innovation and cross-integration of systems and their departments.

In truth, the idea of the CDO isn’t new. Digital integration has been quietly happening for years and continues to pick up speed. However, more and more companies are finding that the having a CDO gives them a distinct advantage. Still, the position has its detractors. For example:

Do Organizations of the Future Really Need a Chief Digital Officer?

Here, Arjun Sethi (Partner, A.T. Kearney) writes in Bank Systems & Technology, “Think about it: digital disruption will force a formerly slow, conservative, top-down industry to become more nimble and customer-focused. Should that transformation be managed by new top-down structures, with a single individual charged with changing behaviors throughout the organization?”

He concludes, “You could try to hire an incredibly talented central figure to stay on top of all of them. But you might be better off fostering a well-coordinated team with responsibilities dispersed to those close to the situation they’re monitoring.”

I don’t wholly disagree with Mr. Sethi. In fact, I feel that well-coordinated teams close to the situations they are monitoring are essential. However, these ideas—that of a traditional Centralized Organizational framework and that of the more nimble Hub & Spoke organization model—are not mutually exclusive.

Consider the reason for these structures in the first place. Without them, an organization of a certain size will collapse under its own weight. Without a CDO (or someone at the top with these same responsibilities), teams will tend to develop their individual ideas separately. From this, you’ll get a lot of little innovations that are not always coordinated as well as the potential for the innovations to compete with each other. This situation can create “turf wars” that actually hinder your company’s growth.

The nimble collaboration we all hope to achieve needs to be encouraged and well managed for large-scale innovation to take place. The CDO ensures that this happens in the most efficient and effective way. In fact, that is why a CDO is a c-suite position. In this era of “digital disruption,” many organizations, particularly large ones, have technical needs that are constantly changing. Someone must plan for, monitor, and manage these factors continually, and that person needs the power of a c-suite position to make the changes necessary to maximize the benefits.

For companies not quite ready to make this organizational, c-suite change, there are vendors who will perform a “digital assessment.” A digital assessment is a survey of an organization’s technical systems and initiatives, which results in recommendations aimed at coordination and improvement. Often, these vendors can help you implement meaningful change, vastly improving a company’s systems. However, what you won’t get is a full-time, high-level executive to provide long-term leadership.

For that, companies are turning to CDO’s. Change in digital technology, media, and marketing is happening faster today than it ever has before. Having someone who can help you manage that change can help you leap ahead of your competition.