Leading digital transformation: The role of a Chief Digital Officer
The role of Chief Digital Officer is still seen as that of an effective agent of change for successful digital transformation. This article helps define the role of Chief Digital Officer and the digital transformation process, whilst still presenting its limitations.
Digital transformation, by nature of being complex and in continuous change, requires the development of new skills. Thus, new professions have emerged within organisations and the C-Suite. These include Business Intelligence Managers, Growth Hackers, and many others. Among these new professions, the Chief Digital Officer stands out, particularly at the C-Suite level.
A study of the world's 2,500 leading companies, conducted by PwC, found that only 21% had a Chief Digital Officer.1 Perhaps even more surprising is that this represents a 250% increase from the previous year’s survey, which found that only 6% had a Chief Digital Officer. The role of Chief Digital Officer is still seen as that of an effective agent of change for successful digital transformation, despite the fact that the importance of the role is still sometimes questioned.
This article helps define the role of Chief Digital Officer within a company, and the digital transformation process, whilst still presenting its limitations.
What is a Chief Digital Officer?
The role of Chief Digital Officer is also known as a Digital Director, or of Head of Digital Transformation. This role wears several hats:
- Enabling digital transformation and value creation through new tools and technologies
- Easing the company's transition to digital with customers and partners
- Communicating and persuading the importance of digitalisation throughout the entire company, and
- Making digital a fundamental part of the organisation's strategy.
To succeed in a digital transformation, a company must develop an appetite for digital change management and build a digital culture. The Chief Digital Officer enables this to happen. Therefore, their role is to become the company's "digital expert", and help teams get familiar with, and excited about, digital technology.
Yet, the role goes beyond the introduction of teams to basic digital tasks - a thing of the past, albeit a very recent past. With a large number of "digital natives" now in the workforce, the Chief Digital Officer is seen as a company’s "Chief Transformer" rather than just a "teacher".
In the digital age, an organisation working in silo is no longer an option. That is why, the Chief Digital Officer, who is usually a member of the C-suite, will also be responsible for linking other roles one to another. These roles include:
- Chief Data Officer
They are responsible for the data and security strategy. Their role is to identify the data the company needs to help leaders in the decision-making process.
- Chief Technology Officer
They are responsible for analysing new, external technology opportunities, digital trends, and for research and development that matches the needs of digitalisation of the company.
- Chief Marketing Officer
They are responsible for the marketing division, and the implementation of new digital marketing techniques according to the company's marketing strategy.
- Chief Innovation Officer
They are responsible for bringing forward ideas of innovation that can help the company's strategy and growth, boost its place in the market and in front of its competitors.
- Chief Information Officer
They are responsible for implementing new IT structures and new technologies in the company.
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The role of the Chief Digital Officer is to develop a holistic digital transformation strategy that will extend to all departments.
Being a multi-disciplinary digital expert, their role allows them to have an overview of the entire digital transition, including: systems, production, marketing, sales, operations, corporate culture, products and services.
The key competencies required for the role of Chief Digital Officer are:
- Developing and articulating a strategic vision,
- Identifying and resolving issues across all departments,
- Having extensive experience in digital and business transformation, with a focus on the technology sector and/or involving consumers, and
- Possessing the managerial skills to lead a project from start to finish.
- Having the patience to navigate between the departments in a diplomatic manner,
- Collaborating with all teams, and
- Showing leadership qualities.
A McKinsey study shows that the Chief Digital Officer spends 80% of their time building and developing relationships.2 Having defined the role of the Chief Digital Officer, we will now take a closer look at their tasks and responsibilities within a company.
Why do organisations need a Chief Digital Officer?
As a "value creator", the Chief Digital Officer is a key asset for companies that have in plan to develop digital transformation projects. Forbes magazine explains that 82% of CEOs believe they owe their digital transformation success to their Chief Digital Officer.3
In the following, we explain some of the reasons why organisations (still) need a Chief Digital Officer:
1. To plan and put in place a digital strategy
Having a strategist at management level, who is capable of identifying new technologies to help achieve the company's objectives, is a great asset. A company that aims at moving beyond the experimental phase of digital, for example, will need a Chief Digital Officer to plan and put a digital transformation strategy into place.
2. To ease the transition of the company to digital
The Chief Digital Officer supports the company in reaching its digital transformation objectives by sharing and embedding its vision with the teams. In face of resistance to change, the Chief Digital Officer is diplomatic and exhibits leadership abilities. Let's take as an example a company that has been successful in its digital transformation but whose teams do not see the value of digitalisation. In this case, the company has every interest in recruiting a Chief Digital Officer to help ease the transition to digital and build a digital culture.
3. To push for innovative digital solutions
The multi-disciplinary nature of the role of a Chief Digital Officer enables them to push for innovative digital solutions for products, services, processes, consumer experiences, marketing channels, and even business models. Whilst each project that brings innovation remains within individual departments, the Chief Digital Officer manages and oversees the entire portfolio of digital projects. Thus, their holistic vision on digital and innovation creates a dynamic pull for the entire company.
4. To measure the ROI of digital projects
The Chief Digital Officer is responsible for the impact of digital transformation on consumer engagement, new business revenue, and the effectiveness of change. All which are measurable. Thus, the Chief Digital Officer can show the positive impact of the digital strategy by measuring the return on investment (ROI) of digital projects.
The Chief Digital Officer manages and oversees the entire portfolio of digital projects. Their holistic vision on digital and innovation creates a dynamic pull for the entire company.
5. To expand digital innovation throughout the corporate network
As "Chief Transformer", the Chief Digital Officer does not abide by internal recognition only, but by external recognition, too. The corporate network, including customers, perceives the changes implemented by the Chief Digital Officer.
6. To develop and keep digital talent
A study by The Atlantic and Capgemini reveals that 54% of executives believe that the lack of digital talent is slowing down the digital transformation of their company.4 With demand outstripping supply, companies are increasingly short of digital talent. The Chief Digital Officer, in close collaboration with Human Resources, can attract, select, develop, and retain digital talent.
7. To "save" the business in the digital age
The expectations heaped on the Chief Digital Officer are high. The role requires being active on all fronts, be it internal or external. Internally, they must inspire teams to ‘go digital’, and integrate digitalisation into all processes. Due to their digital competences and knowledge, more often than none, the Chief Digital Officer is seen as a "saviour". Externally, the Chief Digital Officer needs to create "the buzz" and engage the interest of consumers and of opinion makers.
Now that we have seen what the role of a Chief Digital Officer brings to a company, let us explore some of the limitations of the role.
What limitations does the role of Chief Digital Officer have?
Despite the impetus to embrace digital transformation, the recruitment of Chief Digital Officers has declined in recent years. Only 2.2% of companies surveyed in 2018 had created the position within their company.5
Some of the reasons for this, and limitations of the role of Chief Digital Officer, include:
1. They experience the outsider syndrome
As this role is new, Chief Digital Officers often come from outside of the company and this makes it difficult for them to gain the trust of leaders and teams alike. Therefore, the first difficulty a Chief Digital Officer faces is the ability to get close to teams and gain the moral and financial support of the C-Suite.
2. They need to constantly convince colleagues
According to Forbes magazine, 80% of Chief Digital Officers underestimated the difficulty of changing the culture of their teams and their companies. They often have the impression that they spend more time convincing people of their digital strategy rather than executing it.6
3. They need the full support of their CEO
To be successful, CEOs must award Chief Digital Officers with a strong mandate to lead all digital projects, at all stages. The CEO must also, themself, be ready for change, otherwise this will create friction that will slow down the work of the Chief Digital Officer.
4. They need to know what comes next after digitalisation
There will come a time when all companies will have completed their digital transformation processes. Therefore, the role of Chief Digital Officer may no longer be relevant, leaving room for new functions to emerge.
5. They are under significant pressure
The Chief Digital Officer is often faced with high expectations, so the pressure is significant. According to the World Economic Forum website, the average tenure of a Chief Digital Officer is 31 months, with 3/4 of Chief Digital Officers leaving their positions after this.7 This is less than the rest of the C-suite.
Despite its apparent novelty, the role of Chief Digital Officer is critical to a company's digital transformation success. Known as the "leaders in the unknown", Chief Digital Officers' have earned a place within the C-suite in a short amount of time. Thanks to their advanced technical knowledge and strong interpersonal skills, they help organisations remain attuned to digital opportunities and trends.
1 'Have we reached “peak” chief digital officer?', Strategy Business, March 2019.
2 'Transformer in chief’: The new chief digital officer', McKinsey, Septembre 2015.
3 'Chief Digital Officer Becomes A Compelling Career Path', Forbes, Decembre 2019.
4 'It’s Time to Close the Digital Talent Gap', Capgemini.
5 'Have we reached “peak” chief digital officer?', Strategy Business, March 2019.
6 'How To Set Up A Chief Digital Officer For Success', Forbes, March 2020.
7 'From dazzling to departed - why Chief Digital Officers are doomed to fail', World Economic Forum, February 2020.