Attention CIOs and CTOs, the best part of your job is under attack. If you don’t get ahead of the trend toward the Chief Digital Officer role, your job may become a technology backwater, which is never what you had in mind.
Many CIOs and CTOs have never fought hard enough to assert themselves as business executives. Instead, most have laid a strong claim to technology expertise. Nobody thinks of a CDO as a geek. Rather, a CDO is supposed to be a Steve Jobs wannabe, someone who sees all the technology and business pieces on the table and puts together a transformational new product, service, or way of working.
Queue record scratching sound. Isn’t that why you signed up to be technology leader? Most CIOs and CTOs didn’t intend to be the mechanic in overalls who deals with the complex stuff nobody wants to pay attention to. But too often, for many reasons, that is what happened. (See “Why CIOs and CTOs Suffer from the Raw Technology Persona” for some of the reasons why.)
“The CDO role is fulfilling promise that CIOs and CTOs have often aspired to,” said Dave Mathison, organizer of the upcoming CDO Summit in NYC on 4/22-23. “While CIOs and CTOs often struggle to fit the idea of business leadership into their roles, the entire mission of a CDO is leadership. In my view, the next generation of CEOs will come from the CDO role.”
Vendors have seen the importance of the CDO role as well. The recent report from McKinsey couldn’t be more bullish. Why? Because they want to help companies figure out what sort of CDO they need. Here is a key element of McKinsey’s advice:
“Find the right digital leaders. Leadership is the most decisive factor for a digital program’s success or failure. 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. These developments must continue if companies are to meet their high aspirations for digital.”
Bryan Kirschner, head of the Apigee Institute, sees getting the attention of CDOs as one of the top priorities for any tech vendor. “The CDO will be leading the transformation of business for the next five years. Apigee’s API technology can accelerate this digital transformation, and if we don’t reach CDOs, we are missing critical opportunities.”
To avoid getting blindsided by this trend, CIOs and CTOs must lead this conversation. In the modern business world, the attitude toward the Chief Digital Officer has become a shibboleth, an indicator of where a company is in its digital journey. You want to be the one who brings up the idea of the CDO and makes sure you get the job. If you don’t, you won’t.
What you are going for is the story told by the titles Lori Michaels has held:
- 2007 Jul – Oct: Vice President, Web Technology, The Economist
- 2007 Oct – 2010: SVP, Digital Development, The Economist Group
- 2010-2012 Feb CTO, The Economist Intelligence Unit
- 2012 Mar – 2013 Sep: CTO & Senior Vice President, Digital Solutions, The Economist
- 2013 Oct – 2014 Feb: Chief Digital Officer & EVP, Digital Solutions, The Economist
- 2014 Mar – Present: Vice President, Digital, Scripps Networks Interactive
There are many steps in this journey. Today, I will cover how to explain the role of the CDO to the rest of the company.
It’s the Digital Stupid!
The digital in CDO is a supremely overloaded word and the secret to the buzz. The first question to ask is Why digital? Why not Information or Technology or Data? After all, we already have CIOs and CTOs and sometimes Chief Data Officers. Digital means more than information and technology, or data, which are raw materials. Digital, the way most people use it, refers to larger transformations. Amazon digitized the book business and grew from there. Netflix digitized movie rentals. Google digitized advertising. And so on. Unlike previous generations of technology, which focused primarily on internal efficiency, the digital transformation almost always focuses on providing a better experience for customers. In this way, the concept of digital is bound up in the brand.
Digital also refers to agile practices that digital natives have created to design, deliver, and update products at lightning speed, such as dev ops, continuous integration, continuous deployment. The digital natives run their businesses on many different platforms that are all updated independently and assembled into a digital supply chain. With such a structure, annual planning cycles go out the window and new products and updates are delivered weekly or monthly.
Digital also refers to the fact that unlike raw materials, executives can become digital on their own by using higher level services. Chief Marketing Officers have led the way in this regard so effectively that people have wondered if they will become the new leaders of technology spending. What is lost in this thought is the recognition that for the CMO, many solutions are easily outsourced. It is the way digital marketing services are used that differentiates.
Digital also refers to the fact that digital assets of a business, the data and increasingly the products sold, are increasing as a percentage compared to the physical. The role of data as source of proprietary advantage and a medium of exchange has dramatically expanded, which has lead to the Chief Data Officer. But figuring out the larger scale shifts in strategy and execution that are needed in this transformation is usually the central task of the CDO.
One interesting phenomenon: While digital is a super set of information, technology, data, and in some ways marketing, The more a CIO, CTO, CDataO or CMO is considered a candidate to take over the CDO responsibilities, the better the job they are likely doing. If a CIO, for example, is just focused on IT efficiency and cost control and not on the business, that person will never be considered for the CDO role, for good reason. In this way, digital means thinking of the biggest and most important picture.
What does a CDO Mean to You?
Here is how the CDO role has become a shibboleth, indicating where a company is in its journey.
If you think the role of CDO is passe, it is likely you work at a company that is a digital native, like Amazon, Facebook, Google, or that ilk. To the staff at these firms CDO means nothing. You might as well just add digital to everyone’s title, because everyone is focused on optimizing a business that has digital DNA.
If you already have a CDO or wonder how a CDO might help accomplish a variety of digital initiatives at your company, you probably have a transformation underway and are attempting to figure out how to make it work. Such companies are usually wide awake to the digital transformation at hand and are in the thick of a struggle.
If the idea of a CDO just seems like a fad or irrelevant, it is likely that the impact of the current digital transformation that is changing almost every industry is perhaps lost on your company. Or you could be in the rare company or industry, and there are some out there, that really will not be digitized in the foreseeable future.
What is the Right CDO Agenda?
While the CEO at a digital native company is essentially the CDO, at companies at different stages of transformation, the right CDO role can vary. Crafting the role appropriately can be crucial.
At a firm that is in the thick of an enthusiastically embraced digital transformation, the CDO is best defined as a coach, adviser, and clearinghouse. The role should be to help reduce risk and avoid problems while each business unit or function carries out its own transformation. The CDO in this case is often a close adviser to the CEO with respect to the challenge of allocating funds, avoiding duplication, and aligning efforts. The biggest mistake in this situation is premature optimization. It is vital to allow experiments to occur, and sometimes these will not be efficient. In these cases, the CDO may be new to the company or a qualified CIO or CTO could take on the role.
At a firm that is at the early stages of its journey, it may make sense to add the CDO title to an existing line of business executive or to the CMO. The goal for this type of CDO is to make an initial digital transformation successful so that the rest of the company sees the light. The CDO is essentially a pioneer with a specific task to perform.
For a company just getting started, the CDO role becomes strategic planning. The CDO must estimate all dimensions of how an industry may be digitized and suggest projects that could help gain experience and confirm assumptions. Once the strategy is in place, the CDO becomes a catalyst to make it happen.
The challenge for a CDO playing the first role is to be relevant, not just window dressing, and to help make the digital transformation faster. The danger with the last two roles is that people assume the CDO is taking care of the digital strategy and abdicate their duty to help determine the right path forward.
In the end however, the idea of a CDO is one that encourages and completes an important transition, one in which a company adapts to the new possibilities of a world that is far less physical, and far more infused with data, technology, and automation than ever before. From the perspective of a shareholder, whether this role is subsumed in that of the CMO, CIO, or CTO is far less important that that the transition take place with all deliberate speed.
But if you are the CIO or CTO, then it is important that you assert yourself and avoid letting a CDO steal the best part of your job.
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