The role of CDO for the Business’ Digital Transformation
The Chief Digital Officer is transforming not just a silo but the entire organization, including operations, marketing, finance, and HR. David Mathison, founder of the CDO (Chief Digital Officer) Club who also runs the CDO Summits worldwide, summarizes the role of the CDO and the extent of digital transformation with this statement during an interview.
Mathison also mentioned a recent McKinsey report describing the new chief digital officer as “transformation in chief”. Agreeing with the report, he commented that CDOs are taking on a much broader, deeper role in transforming an organization. About ten years ago, this role was mostly a token role, only to show the world that companies understand digital transformation by hiring a digital officer.
CDO’s role and how it was defined
Chief Digital Officers are responsible for the organization’s digital transformation, according to Mathison. There are other titles that perform the same role of CDOs, such as Chief Marketing Officers, Chief Information Officers, Chief Technology Officers, and Chief Technologists. Their roles are all inclusive in CDO’s obligation. CDOs are usually hired to charge of the business’ digital transformation. They are given P&L responsibility and establish a profit center.
The first CDO ever hired, according to Mathison, was Jason Hirschhorn. MTV hired Hirschhorn in 2005 and Mathison’s insight was that hiring Hirschhorn was MTV’s defensive act against the empowered customers in the music industry. In this enterprise, their customers became their strongest competitors. Customers now have the ability to create music on their laptops instead of expensive music studios. They also have the medium to share that music and other artists’ music on a peer-to-peer platform. The entire music industry was affected and reshaped.Click here to read more about this article
That same phenomenon is also now slashing every industry across the globe. This is why many CDOs are now being employed in all sectors, all of them performing the tremendous task of digital transformation.
In the public sector, for instance, the CDO makes the website as user-friendly as Google, among other roles. In the private sector, the CDO is involved in transforming the organization, not just focusing on profits, but including the transformation of HR, marketing, operations and finance.
Obsession with the customer
Mathison cited Mike Bracken’s achievement in the United Kingdom’s Government Digital Service as the best example of digital transformation. He mentioned that a typical digital guy will revamp a website, maybe even increase the number of pages of an already loaded site. But what Bracken did first was to eliminate thousands of pages from the site. Bracken overhauled the entire IT procurement process and cleaned up the website to help users get things done.
He also commented that the frustration of many government websites’ users is seeing a lot of unnecessary contents (photos, texts, plugins, ads and frames). Customers get frustrated seeing things that have nothing to do with what their ultimate goal is, which is to get something done. Mathison highlighted the CDO’s strong enthusiasm to make the customer journey totally painless and extremely fulfilling.
He further noted that once an organization becomes digital to the core, it will become inherent to the company’s head and the entire team. Their main focus is on the customer, and their first priority is to make the customer journey as smooth and flawless as possible. Obsessive focus on the consumer is what CDOs are passionate about.
That’s one of the key achievements of Government Digital Service (GDS). Besides being the best example of digital transformation in the public sector, it is also a role model that private industries can emulate.
The growth of the CDO position
Ten years ago, Chief Marketing Officers and other marketing professionals always relied on the IT department for customer statistics and marketing data. These days, marketing department doesn’t have to fully rely on IT anymore to get the information they need about the customers. They can make use of available dashboards to get real-time information or through social media inputs and other online applications.
This trend enhanced the role of CMOs. However, there is a vacuum. Marketing professionals do not have the ability to digitally transform HR and other departments including finance and operations. This scenario opened the door for CDO’s increasing functions, a position that is responsible for the overall digital transformation of an organization. And in government offices where there are no CMOs, there was no leader responsible for taking care of the customer. As such, there is no career path from CMO to CDO in the government.
As digital transformation continues to scramble the traditional business structure, companies hire CDOs to deal with the disruption. Interestingly, companies also bring in CDOs as succession plans in case something happens to the CEO. These companies understand that hiring an expert can bring the organization together.
Notably, many Chief Digital Officers are becoming Chief Executive Officers. In the advertising industry, for example, about 60% of CDOs used to be CEO, President, or General Manager. It gives a good explanation why many CDOs are becoming CEOs – because they have traveled that career path. Meanwhile, more than 30% of CDOs in media and publishing were previously CEO, President, or GM.
As a “transformer in chief”, as described in a McKinsey report, CDOs are responsible for managing comprehensive changes in the company. They are in charge of everything, from bringing up-to-date how an organization works to establishing entirely new businesses. In all situations, CDOs must perform their duties effectively and make progress quickly.
Companies hire a CDO for two main reasons. First, to dissect, understand, and address complex issues before making any substantive progress on digitization. Second, to create integrated transformation within its current structure, which the CEO finds very challenging.
These market demands and business challenges make CDO’s role more prominent, and the number of CDO is growing. As they play a major role in the business’ successful digital transformation, their number is expected to continue to rise.
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