24/09/2018 |

Is It Time to Hire a CDO?

What is this new role? Why would you want one?
What is the difference between that and CIO/CTO?

Bridge with lights of cars

The digital transformation brings a multitude of challenges. New processes, business models, methods … new responsibilities and thus new roles are developing in companies, because digitization is supposed to be practically organized. Whether this works depends on the companies themselves. One of these new roles is the Chief Digital Officer. Is this now old wine in new bottles, what does he actually do and do companies really need a CDO?

One of the key lessons learned from studies on the progress and success of the digital transformation in companies is that management is to provide momentum and incentives. It should be best represented at the executive level. If the digital transformation is not firmly anchored there, and if it does not have sufficient significance and budget, then the process of change cannot take place quickly enough and comprehensively. The approach of change is infiltrating and leading, at best, to what George Westerman, Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy, described as:

“When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.”

The Chief Digital Officer is now the driving force in the overall transformation process.

But honestly: who wants a fast caterpillar?

However, to turn the caterpillar into a butterfly, they say, you need the Chief Digital Officer, this new C-Level position.

The role of a CDO

CIOs and CTOs have become popular. Their tasks and competencies overlap in part and both focus on technological issues. This does not only refer to the infrastructure, but also to the know-how of the employees. However, while the CIO uses IT structures to develop new businesses and products, the CTO always evaluates new technological trends in terms of strategic impact for the business.

The Chief Digital Officer is now the driving force in the overall transformation process and either part of the management or in direct line to it. His role as the most senior digital leader is to define the company’s digital strategy and to be agile at all levels of action. The focus is on building sustainable competitive advantages. For this, the CDO has to make himself familiar with all new technological trends and know or even better can anticipate how relevant they are to the business model.

Thus, the CDO becomes the central hub of the processes and is often at the interface between strategy, corporate development, marketing and technology.

Rather, companies often find it difficult to delineate the tasks of a CDO and formulate the goals he has to achieve.

Do you need a CDO?

But as simple and clear as this description seems, the entrepreneurial world and reality are more complex. Rather, companies often find it difficult to delineate the tasks of a CDO and formulate the goals he has to achieve. So the management in the process to fill such a position, should ask:

  1. Which (corporate) goals need to be achieved? Is it about the digitization of processes and should new business models be developed? Are agility and automation part of these new approaches?
  2. Which tasks should he take on? Does he have budget responsibility? Should he act in a more advisory and conceptual way or be the one who implements and drives all ideas?
  3. What are the (business) goals of the CDO? May he only attend decisions and get a veto right? Or is he himself a decision maker whose approval and signature are essential for decisive initiatives and strategies and thus define him as a creative decision-maker?Last but not least
  4. Is the organization ready for a CDO? The CDO will bring significant changes, because that’s his mission. Will the organization give him the necessary support? Otherwise, his project will fail while at the same time demanding time and personal capacity, but without adding value.

The position of the CDO is still under scrutiny. Necessity and success are discussed very controversially. One aspect is – and certainly not wrongly – that such a comprehensive task cannot be done by a single person. So it’s up to the organizations themselves, and especially the management, to decide if the decision for a CDO is right and his work can succeed. For only if the digital change is understood as a holistic task and transparency and clear goals are present, if at the same time enough space is given to the position itself and thereby have own successes, the CDO can succeed its function as a pathfinder of transformation.

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