Hiring the CDO—hardly a temporary endeavour

Gartner predicted way back late 2012 that 25% of (all?) organisations would have a CDO on the payroll by 2015 (Gartner, November 2012). Two years later PwC (December, 2014) noticed that only six per cent of world’s top 1,500 companies had this role represented with executive management.

Somehow that not only unveils something about pace and expectations. Also, it somehow gives rise to the suspicion that a vast majority of companies either did not consider hiring a CDO and/or perhaps did not recognise the current and future strategic impact of disruptive technologies on their respective organisations.

From a management perspective, strategic focus is imperative and key to shareholders trust in their investments. Hence, aggregated competencies, skills and experience of top management are usually expected to encompass the full range of functional areas through as assigned to the full C-suite of executives.

Still, how do rapid changes in the external environment like the ones imposed by disruptive technologies impact on the ability of top management proactively to deal with measures ensuring continued existence as a (significant?) player in the market?

Not surprisingly, requirements on the individual executive to span management duties of more than his or her key area of responsibility add significantly to the liability ensuring that strategies are coherently defined, implemented and executed. In turn, many organisations often run with the same executive responsible for more than one key area, whilst also assuming executive responsibility for another area like digital strategy. In the short run, it may be cheaper, while risky from a long-term perspective.

Yet, the risks in doing so are that one or more executives either potentially lose focus in what is not the key area of responsibilities and/or in the face of rapid changes potentially do not possess the skills and/or capabilities to articulate a strategy for the non-key functional area.

Accordingly, wise executive management teams are likely to arrive at the conclusion that vital, yet formally unarticulated areas of responsibility and strategies must be formally assigned into a separate functional area.

Against this backdrop a new executive manager role is growingly seen to gain footing. While highly symptomatic by nature, yet directly reflecting a shift in market dynamics towards volatility and how competition becomes unforeseeable, Chief Digital Officers (CDOs) are therefore increasingly seen proactively hired to assist top management in meeting the challenges from a new strategic reality.

This reality is dictated through disruptive technologies and unseen competitive threats, essentially exposing top management through lack of specific knowledge to deal with the fact that an upgrade of the strategic fit is required.

Putting it differently, frontrunner organisations hiring CDOs already made the pivotal choice in deciding that executing on a digital strategy remains a key to future competitive advantage and creation of value.

Taking a quick look at the main responsibilities of the CDO, McKinsey (September, 2015) not surprisingly views the CDO explicitly responsible for integrating digital with strategic planning process. By initially presenting organisations through a list of questions challenging management on the need for a CDO, this particular role must work almost symbiotically with the CEO and the rest of top management.

Trust from colleagues is gained by providing …’market trends and developments in technology and customer behaviour, both inside and outside the sector’. That said, while McKinsey emphasise earning of a seat at the strategy table, my expectation would be that this comes implicitly in being hired a CDO, whilst also overseeing that digital capabilities for increasing customer focus/retention, ‘business agility, speed, data, network extensions’ (McKinsey, September 2015).

Interestingly, authors of a Deloitte Digital report (May, 2015) on disruptive technologies admit that reality essentially outpaced the consulting company. While correct on primary drivers in predicting impact of disruptive technologies on 10+ industries, the impact of predictions in context to adoption rates made authors reflect twice, since much more pronounced with businesses and consumers than expected.

In turn, that would require a skilled CDO not only to possess deep knowledge on market dynamics and technologies, integrating these with corporate strategy. Also, the CDO would need to know how to materialise low-hanging benefits/first steps in transforming the organisation to execute on a digital strategy.

Both consulting businesses emphasise that the CDO is a very critical role in making sure that the entire transformation process will succeed—allowing the digital strategy fully implemented and integrated. Yet, they also indicate that the role as carrying a separate functional responsibility is temporary and likely to become obsolete in few years.

In other words, hiring a CDO should not be postponed to once a transformation has taken place; or worse, it potentially fails. Deloitte Digital predicts that the responsibilities of the CDO role will soon become integrated areas of other executives in top management, i.e. digital strategy is corporate strategy. But the CDO is no longer around!

Consequently, while many professionals view the CDO ideally to embody the merge of marketing strategy and IT services, and that the CDO holds the key to driving a faster lane in becoming the CEO such perspective may grow more and more relevant. Yet, I believe that the role of the CDO is far from outpaced in five years’ time, considering the speed and impact of disruptive technologies.

Rather, I expect that the role of the CDO tends to grow even more relevant in years to come. Aligning with the words of Deloitte Digital’s report, disruptive technologies are observed to carry significant impacts on business models, value chains, products, customers, competition, etc. Hence, the continued need of competencies and skills to proactively match dynamic capabilities of the organisation up against more and speedier changes remains evident. Rapid changes and volatile market dynamics inexorably fuel the risks and threats from of unexpected competition. We have not seen it all.