In 2012, Gartner predicted the chief digital officer (CDO) position would be the most exciting strategic role in the decade ahead. Russell Reynolds described the position as overseeing the full range of digital strategies and driving change across the organization—one with great potential as a successor to the CEO role in the digital era.
Yet clarity around the position has remained somewhat elusive.
In part, that’s because every organization has been at a different point in their digital journeys when creating the role, with unique goals for their own transformations. As a result, CDOs have had varied mandates, depending on where they work.
A few years in, however, the CDO role has become more prevalent, and as the position has grown and expanded, some commonalities and trends in the role across industries have begun to emerge.
1. CDOs Take An Enterprise View Of Transformation
While the CDO is a relatively new position—more than half of CDOs have been hired in the past three years—“the role has evolved quickly from focusing on solely digitizing the customer experience to looking at the entire business,” according to Scott Snyder, partner, digital and innovation, at Heidrick & Struggles.
In some companies, the CDO serves as the overall orchestrator of digital transformation.
“Rather than in a vacuum off to the side running new things, a CDO is focused on transforming what already exists, helping the entire company shift to a digital mindset,” said Bertram Schulte, CDO at SAP. “I like to think of myself as a king without land. I’m orchestrating the transformation, but I’m not owning it. It crosses every area of the business.”
That wasn’t always the case for CDOs—and it may be less so for those in companies appointing their first CDOs. “Companies that have had one are starting to see a different evolution of the role,” said Rob Roy, who became CDO of Sprint in 2016 and has since shifted his focus from delivering customer-facing digital capabilities to getting “the rest of the organization to become more digitally aware and focused.”
To fuel those efforts, he has rebranded his own organization as “The Hive” and has created an internal pitch book and branding effort.
Errol Jayawardene, CDO for integrated marketing agency Red Lorry Yellow Lorry, echoed Roy’s sentiments.
“Most CDOs will be charged with experimenting with digital tools that will help improve the growth and efficiency of their business. Most will be tasked with building digital skills and knowledge internally,” he said. “If digital offers a revenue stream for the business, a CDO will either support or lead new business in that area.”
2. Data Is Their Currency; Experience Is Their Mandate
A common theme among CDOs is “mastering data to successfully and cohesively lead digital efforts across a company,” SAP’s Schulte said. “Whoever gets the data right gets digital right.”
That remains a huge challenge for most CDOs. “We get so much data from different sources...it becomes harder to pull it all together to deliver meaningful insights to the business,” Jayawardene added.
That data is the key to creating new and better experiences—for customers, employees, suppliers, and partners.
“I personally feel the main job of the CDO is to focus on experience. That can be customer-facing, and it can be that which makes the employee’s job more delightful,” said Kelly Smith, senior vice president and CDO for MGM Resorts International. “Things like access to data and infrastructure are important for any of that to work, but experience is really the clear demarcation. We need to surprise and delight and reduce friction.”
3. They Take A Business-Focused View Of Technology
The best CDOs “think business first, IT second,” said Wayne Sadin, who carries both the CDO and CTO title at senior living developer and operator Affinitas Life.
At Sprint, Roy describes his approach to the CDO role as people-focused rather than technology-driven. “That is helping us gain some significant momentum and create much better products that customers and employees are excited about,” he said.
CDOs must be digital triathletes, Heidrick’s Snyder said, “able to look ahead to define a digital strategy that creates a true advantage, execute in the present to digitize the current business, and innovate for the future to create the new generation of digital offerings and operating models.”
4. Their Reporting Structures Vary
Some CDOs might insist that the truly strategic digital leader report directly to the CEO—and, indeed, many do, including Sadin, Schulte, Jayawardene, and Jouret.
But in other cases, it makes sense for the CDO to sit elsewhere in the org chart. For example, MGM Resorts’ Kelly reports to the company’s chief experience and marketing officer, Lilian Tomovich.
“The organization we started is called Digital Ventures, and we run alongside our IT organization, although we are technically part of the marketing organization,” Kelly told CMO.com. “We have several collaborators in that we work with closely with IT and enterprise analytics because most of our ideas need to tap into our existing systems of record, and need reliable infrastructure and relatively low-latent access to the vast amount of data. This structure is very similar to the early setup at Starbucks, where I was previously employed.”
Rob Krugman, CDO for Broadridge Financial Solutions, reports to an executive committee member responsible for both a business line and transformational efforts across the entire organization.
“The organizational structure is an independent Center of Excellence that serves business lines across the organization and is made up of strategy, product, technology, and user experience resources,” he said.
5. They Partner Broadly
In the earliest days, the CDO’s most important collaborators were in sales or marketing. Today, CDOs reach out to all functions.
“One of my main roles is to ensure that all of the C-suite has a great relationship with digital. I work very hard to stay very close with org to understand pain points and understand where we can help,” said Sprint’s Roy, who is currently doing a lot of work with the customer care group.
He said he works most closely with the company’s CIO. “He and I are left hand and right hand and work very closely on a day-to-day basis. We partner extremely close with our care folks to not only serve customers but help create new products. I stay very close to the CMO since we brought all our digital agency work in-house, but I also work closely with our HR, logistics, COO, and B2B organizations.”
6. They’re Creative Problem-Solvers And Skilled Storytellers
One of the most important capabilities a CDO can have is the capacity for outside-the-box thinking, Kelly said.
“They need to assess the situation inside their organization and leverage creative thinking to determine how best to improve the customer experience and drive better business results leveraging technology and data,” he said. “Certainly, this is also the job of the CIO and others, but the CDO needs to bring a particular brand of product thinking to the table. They will generally be a mix of bold marketer and keen technologist.”
The best CDOs, he added, will be the ones who bridge big data, predictive analytics, and “great production application chops” that resonate with customers.
7. They Feel The Need For Speed
How fast is too fast? That’s one of the biggest questions MGM’s Kelly asks herself, she said.
“Velocity is always a problem,” Kelly explained. “When you think about what slows down an organization’s ability to provide great experiences, the culprits can be systemic. You need to onboard new people, new vendors, and new technologies because what worked yesterday may not work today.”
Yet CDOs must balance speed with ongoing performance.
“One of the biggest challenges is the inherent risk of when to transform existing, successful businesses to new digital models,” Broadridge’s Krugman said. “If this is done too quickly, companies risk eliminating a revenue stream. If done too late, companies risk being disrupted. Driving consensus across an organization on the right timing of these types of decisions can be difficult.”
For Krugman, the solution is to take a test-and-learn approach to digital innovation without harming existing businesses.
8. They Are Evaluating Similar Emerging Technologies
As technology continues to evolve at an incredible pace, nearly every CDO also is continually evaluating the role the techs play. These include artificial intelligence, augmented reality, 5G, blockchain, drone, machine learning, advanced analytics, the Internet of Things, 5G, and blockchain.
“AI and machine learning are truly disrupting traditional business functions, and I see this will continue to be the case since AI is the way to truly capitalize and gain value out of the vast amount of data available,” SAP’s Schulte said. “AI and machine learning helps us to manage the challenge of scale. That’s driving a focus on designing or redesigning data flows, structures, and access.”
9. They Worry About Digital Talent
One challenge that has remained constant for CDOs since the start is the struggle to find the appropriate digital talent to drive their initiatives. The market for these skilled professionals is tighter than ever.
“A big part of my job is helping to drive a particular conviction around what digital transformation means to us. As a starting point, we think it means developing the requisite digital capability to really dominate in the years ahead,” MGM’s Kelly said. “As such, growing the new digital organization and building muscle in new areas, such as product management, application development and digital design, are pretty foundational.”
Part of Kelly’s job is recruiting the kind of talent “that otherwise might go to work at Airbnb or Starbucks,” he said.
10. They Won’t Be CDOs Forever
Along with the evolution of the CDO role, John Barrett, Boston-based partner with national executive search firm ON Partners, has seen the role often disappear or become integrated into a company’s core business model, particularly “in companies or industry sectors that have been faster to adopt digital technologies,” he said.
Indeed, most CDOs readily admit that if they succeed in their roles, they’ll be working themselves right out of a job in three to five years—but they’re OK with that.
“The CDO position is truly an anomaly within the organizational structure and setup of each company, and if successfully implemented, will actually disappear,” Schulte said. “The CDO role is a temporary way for organizations to embrace a fundamental change that goes across the whole value chain and involves every corporate function.”
If he still has the CDO title in a few years, Kelly jokes, he will have failed.
“I fully expect all of us need to reinvent ourselves,” he said, but that’s part of the thrill for CDOs. “What excites me about digital and what we’ve built here is the unknown—solving problems and thinking about how to become innovators and how to deliver on innovation and ideas. I’ll continue to look for areas or roles that provide that.