Everyone is talking about the need for a chief digital officer (CDO). The CDO role has come into fashion as a demonstrable sign that your organisation is serious about digital technology. The topic of what is the chief digital officer their role and responsibilities is full of energy and attention. It is rare to create a new ‘C’ level role with the opportunity to redistribute responsibilities among senior executives.
Discussions regarding the chief digital officer are remarkably similar to past discussions about the chief process officer (CPO). The CDO role may go the way of the CPO, but that is a topic for another timet.The bigger question is assuming your organisation decides to create a chief digital officer, what type of digital officer do you need?
Chief digital officers are not the same, nor are they created equal. The role should be specialised as creating a digital difference demands specialisation. Using a quick and dirty diagram, shown below, we can identify four types of hief digital officers and the criteria around thinking through which one is best for your situation and organisation. Note this may not be the right diagram, welcome your comments, but it provides a way of thinking about how to specialise the role.
There are two main criteria – Revenue/Policy and Line/Staff that position the CDO role. Addressing these axis helps determine the type of CDO your organisation needs.
What is the goal of digitalisation?
Revenue and Policy define the extremes of the vertical axis. The answer to this question describes digital expectations in terms of revenue. Organisations can apply digital technology to generate revenue or to improve operational performance. This is the difference between ‘being’ digital and ‘feeling’ digital. Investing in digital technology to grow revenue means that the CDO role has a revenue target as well as the resources and responsibilities to deliver that revenue target. In the alternative, the organisation pursues a digital substitution strategy using new technology to do old things differently and better.
How does the organisation lead transformation?
The response to this question assesses your approach to organisational change. Does your organisation transform along P&L or organisational lines that allocate resources to specific business units, channels and geographic operations? If you do, then the organisation leads transformational change via focusing on divisionalisation that separates digital from the rest of the enterprise. The alternative is to make being digital everyone’s responsibility by establishing the CDO as a staff function working at the executive level across the entire enterprise.
Revenue/Policy and Line/Staff describe four different types of Chief Digital Officers
Responding to these two questions describes the four possible types of chief digital officers shown in the graphic below. Each type is a digital officer in their own right, but with their own focus, responsibilities and accountabilities. These types represent the range of CDO’s I have encountered so far.
Note the goal statements are consistent vertically as the revenue vs policy decision forms the dominant dividing line. Each of these CDO types is summarised below.
Meeting digital revenue responsibilities via leveraging line resources.
A CDO who is directly responsible for generating revenue from digital resources via leveraging line resources is a chief digital revenue officer. This executive builds and operates the various required to create accretive revenue growth. This is the chief digital officer as senior business unit executive often running a digital operation alongside traditional products services and operations.
Revenue responsibilities are rather clear and straightforward but measuring them in a blended world of traditional physical, IT and digital technologies can be complex. There are multiple ways to measure digital revenues. Measuring unique digital channels, like selling products or services via mobile applications, is one way to account for digital revenue contribution. Another approach is to look at the participation/contribution of digital resources in growing the organisations customer relationships and revenues.
For example, do customers who engage with you via digital means have larger relationships? Do customers targeted and served via big data/analytics generated context have a shorter sales cycle, larger average purchase, greater retention, etc.? A CDO responsible for revenue carries some type of direct revenue metric.
The line management responsibilities of the chief digital revenue office reflect a concentration of resources on building, fielding and extending digital capabilities somewhat apart from existing operational units. This is the realm of the digital business unit, which similar to eCommerce business units of the past, bring focus to digital transformation only to be re-incorporated back into the business as the entire organisation goes digital – just like it all eventually went online.
The digital champion
Digital technology requires organisational transformation that often requires being led by a champion. The chief digital champion officer has resources at their disposal to implement digital policies and plans. Their focus is on creating new digital capabilities in the field. As the champion, they lead a ‘company within a company’ following a policy dedicating resources to disrupt the core business.
The chief digital strategy officer
Any strategy officer employs policy power and a staff role to facilitate, define and lead the organisation in executing new strategies. A chief digital strategy officer is the latest incarnation of such a role. Supported by a small set of staff resources, separate from business units, the strategy officer defines a digital vision, goals and objectives. These form the policies projected from the headquarters across the enterprise.
The chief digital marketing officer
The final CDO role – chief digital marketing officer – is familiar to many and may be the type of CDO in your organisation. The chief digital marketing officer has revenue responsibilities in terms of building demand, brand and a growing customer experience. The CDO often is responsible for digital channel operations and content. The deliver that revenue via marketing programs, projects and support services to generate demand with demand fulfilment remaining in the business units.
Creating a specialised role is a sign of importance. When business processes became important, we created the role of chief process officer. When eCommerce was hot, there were similar roles. We repeated this approach for IT security, compliance, risk and other responsibilities at lower levels. In this regard the move toward wanting a chief digital officer follows a rich tradition of “c-leveling up” roles in response to trends and technology.
Process, risk, security, compliance and digital technologies share an aspect in the sense that they present complex and cross-organisational issues that require a coordinated response. Organisations can define and align the CDO role and its responsibilities generically – for example taking the job description of a corporate strategy professional and substituting the word “digital” for corporate i.e. develops corporate vision becomes develops digital vision, etc. That defines a role, but I am not sure that addresses the challenge.
You may not need a chief digital officer to find success with digital technologies. . Creating a new ‘chief’ does guarantees creating a consolidated buying centre and target, particularly for those chiefs with generic job descriptions.
Specialising the role, responsibilities and resources of a chief digital officer creates the clarity, concentration and accountability necessary to achieve results rather than to engage in digital activities. You cannot expect more if your CDO is the same as everyone other CDO. Specialise and specify the role you need to find success and create a real digital difference.
Mark McDonald is a group vice president and head of research in Gartner's Executive Progams.