Does the Chief Digital Officer Matter Anymore?

Quick word association game, what do you immediately think of when you hear “dinosaur”? Some snarky readers might say COBOL programmers, but I think of the word extinction. One solitary event 65 million years ago wiped out an entire evolutionary branch. We even play out our own species extinction fantasies in movies like Armageddon and Deep Impact.

Extinction is rarely about cataclysmic events. It’s more the slow demise you never see coming until it’s inevitable. Of the 4 billion species that existed on Earth, only 50 million exist today and only a fraction of those died through a cataclysm. It’s like the movie Interstellar where humanity fails to grasp that the Earth and their existence are in jeopardy.

It appears the Chief Digital Officer (CDO) role is also experiencing a slow death. By no means is this meant to be dismissive of CDO’s, some of whom are readers of this blog. There is no denying however what was once a hot new role is quickly becoming irrelevant.

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The number of new CDO hires has drastically declined in the past few years. According to a study by PWC of the 2,500 largest publicly traded companies, only 54 companies had created a new CDO position in 2018. That’s down from 124 in 2017 and 160 in 2016.

It is not just analyst talk. Ian Rogers, CDO of luxury brand LVMH, said:

“Having a chief digital officer is like having a chief electricity officer. You’re using this somewhat technical term to mask the fact that your customer’s behaviours have changed. You need to elevate technology inside of your organisation.”

In the late 90’s, big companies were trying to ride the wave of cool Internet companies. Lots of .Net and eBusiness names emerged. Every consulting firm was a “digital agency”. By 2002, it all disappeared in a zombie apocalypse. Silicon Valley was humbled, Silicon Alley became a ghost town, and companies went back to business as usual & crummy websites.

What happened? These companies wanted the taste of digital, but were not ready to commit. It was not a strategy, but a pet project. One global bank I worked with changed the name of their “eBusiness” unit back to Transaction Services. The Internet had become an embarrassment.

In the course of a decade, everything changed. Social media happened. Smartphones were ubiquitous. Mobile apps were hot. The sharing economy was on fire. Tech startups were disrupting 100 year old business models. And it freaked out corporate executives.

Markets and consumer preferences were moving faster than incumbent companies could keep pace with. Startups were delivering better experiences faster. Lumbering enterprise companies were playing catch-up in a game in which they were poorly equipped to handle.

In desperation, the CDO role emerged as the strategic savor for CEO’s. The thinking was that an executive solely in charge of moving the organization to becoming more digital savvy would be faster. So have CDO’s produced? According to a report by CB Insights (paywall), companies with CDO’s have underperformed their market peers. Ouch.

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The reason is that much like in the dot com 1.0 era, most companies treated digital as taste test rather than a core strategy. The CDO office often exists separate from the organization, but requires deep cooperation across the organization, especially from marketing, IT and front line customer teams.

Much like innovation is not a special group you put in hip offices with latte machines,digital transformation is a whole company thing that requires a significant culture shift. As McKinsey points out:

“Digital isn’t merely a thing — it’s a new way of doing things. Many companies are focused on developing a digital strategy when they should instead focus on integrating digital into all aspects of the business, from channels and processes and data to the operating model, incentives, and culture.”

“Integrating digital” is really code for changing the way an organization works. This means bringing in new skills, shifting the way people work, and creating a more cross-functional organization to increase collaboration while breaking down silos. This however poses a conundrum as one Gartner analyst shared:

“Mostly, the digital officer is a change-driving role. It has no permanence because there is no enduring asset to command.”

For companies that have successfully transitioned to a digital future, having a CDO make little sense. For the digital laggards, the CDO role has become a stopgap measure to show they are doing something. Leadership in those companies need to ask themselves:

  • How well integrated would the CDO office be with the rest of the organization?
  • What is the corporate mandate and authority for the CDO to change the company?
  • Does the CDO office have the full support of the CIO’s, CMO’s, and Line of Business heads?

Honestly though, it is a role that is hard to smoothly fit into an organization. It muddies reporting lines, confuses product ownership & responsibilities, and creates the potential for internal factions to form, destroying collaboration.

Besides the word digital does not carry much weight these days. Just like having a website was simply expected in the early 2000’s, being digital is simply how a company should operate in this age. Maybe instead of hiring or creating a CDO role then, maybe a better idea is to give the CIO the agency to lead the transformation since they already own the technology.

Does your organization have a CDO? In what ways have you seen the CDO impact and enable change in the company?

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Have astronauts in space suits ever taken selfies? If so, how?

Taking one’s selfie game to the next level…

We help IT leaders in enterprises solve the cultural challenges involved in digital transformation and move towards a community based culture that delivers innovation and customer value faster. Learn more about our work here.

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Thoughts on developers, digital transformation, enterprise agility, community building & software engineering culture. Author 👉 https://twitter.com/marksbirch

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