So, the question of whether or not organizations need digital transformation is off the table. The right tech-savvy talent to handle it is also a must-have. But to meet the challenges of digital transformation, lead the team, and orchestrate the process, a new position was created — Chief Digital Officer (CDO).
Digital transformation by Tom Fishburne. Source: MarketoonistMany still think that the CDO position is just another wave of hype, as the cartoon above shows. But the truth is that today's companies can only be successful if they reach their customers via all possible channels. And that is unimaginable without getting involved in the field of digitization.
This post will explain the chief digital officer position, what responsibilities and skills are required for this role, when your company needs such a specialist, and how to get one.
What is a Chief Digital Officer?A Chief Digital Officer or CDO is a C-level specialist who drives digital transformation by building an innovative ecosystem in the company to ultimately transform a traditional analog business into a digital one. To enable this conversion, a CDO uses digital information and modern technologies such as the cloud, the Internet of Things, mobile apps, social media, machine learning-based products, and digital marketing.
This is how Deloitte defines this role, “The CDO is a catalyst and driver of change, bringing a new culture and mindset, and new ways of working to the enterprise, that would otherwise not have happened or would have happened too slow.”
CDO responsibilities are mainly as follows but may vary from one organization to another (we’ll talk about them in more detail in a separate paragraph).
- Bring culture change.
- Develop and integrate a digital strategy.
- Work with different teams to build and manage a digital ecosystem.
- Measure digital efforts.
- Identify new technologies such as AI that can support and enhance existing solutions.
- Attract talent.
With all of these tasks, it may seem that a CDO is someone like this… Source: Argentina’s one-man orchestraTruth be told, it’s often like this, especially with know-it-all specialists who work in smaller companies. But it’s not necessarily the case with all CDOs.
The CDO profession is relatively new, having become established around the mid-2010s. The study conducted by Strategy& in 2018 suggested that 21 percent of large public firms had a CDO. At the same time, leaders at many companies believe that putting a single person in charge of digital transformation may not be the best approach. As the responsibility for digitization lies in different departments, such as marketing or IT, the CDO role often doesn't have a clearly defined function in transformation decision-making. This results in the tendency for the CDO role to be mistaken for or even combined with other positions.
This leads us to the question of where the CDO role fits in the C-Suite of companies and how it’s different from other positions.
C-Suite hierarchy: CDO vs CIO vs CTO vs CMOTo understand the embedding of the new role in the context of the organization’s digital ecosystem, it is important to differentiate the CDO from neighboring, already existing C-Suite roles. We will use the closest positions, namely CIO, CTO, and CMO.
Where the CDO fits in the C-Suite of companiesThe CDO position can be seen as an extension of the CIO, CTO, and CMO titles: It covers "hidden" activities in all areas as graphically highlighted in a viz. That’s why it is important to discuss the differences between these top management roles.
However, keep in mind that in practice a detailed analysis will have to be carried out concerning all possible corporate areas related to digitization.
CIO vs CDOChief Information Officer (CIO) is a corporate executive who is in charge of implementing and managing information technology (IT) infrastructure and making sure the entire IT department works efficiently. They are also responsible for mapping out a business’s tech-related strategic goals. Today, the CIO's focus is primarily on a company’s IT architecture and infrastructure. In some companies, their set of responsibilities extends widely, including digital transformation. That’s why you may come across the position of Chief Digital Information Officer.
While the CIO is responsible for the technical side of digitization, the CDO takes on the strategic tasks and the direct business connection with the overall digitization course of the company. In big corporations, they often work together complementing one another's roles.
CTO vs CDOChief Technology Officer (CTO), originally branched out from a CIO position, is a corporate executive responsible for creating and using the technology stack needed to promote business growth. The focus of CTOs is on external customers who are purchasing company products, tech operations within a company, and ways to increase revenue and profitability.
While the CTO embodies a more outward-looking role in which its primary focus is on identifying and implementing new technologies in the company, the CDO has a more inward-looking role in the company. They are considered problem solvers for existing technical problems.
CMO vs CDOChief Marketing Officer (CMO) is a corporate executive tasked with overseeing the planning, development, and execution of a company’s marketing and advertising initiatives. CMOs are often the catalysts for the digitization that drive the innovation agenda.
Like the CMO, the CDO supports the digital shift in marketing: from traditional marketing to social networks, mobile devices, and wearables. CDOs create ways to open up new markets and explore innovative opportunities.
Who reports to whom?With the initial introduction of the role, many companies had their CDOs report to CIOs (Chief Information Officers) and CTOs (Chief Technology Officers). Now, things differ with CIOs and CTOs being accountable to CDOs. Also, in other large companies, CDOs can be an extension of the marketing department, taking care of the digital part of promoting and selling activities. As such, they answer to a CMO (Chief Marketing Officer).
However, since a Chief Digital Officer usually belongs to the top management level (C-Level) and has far-reaching responsibilities, this specialist typically reports to a company's CEO (Chief Executive Officer).
CDO in a hierarchy of a companyOf course, the line between all these positions gets blurrier as time goes by. Owing to communication and constant learning, more and more specialists shift from being one-trick ponies to do-it-all workers. So to make that blurred line a bit clearer, let’s discuss what exactly a CDO does.
What does a Chief Digital Officer do? Responsibilities and essential functionsAs we already said, the CDO's list of tasks is extensive and varied. Even a quick look at a few vacancies on online job boards like Indeed will show you different CDO role descriptions. Not to mention that the name of the role with the same set of functions may differ too. This is due to the position itself being relatively new and evolving quickly. To move beyond vague, ill-defined, or outdated job descriptions, organizations must be well aware of the key responsibilities every CDO should handle.
Bring culture changeDigital changes require building a digital-first culture. The Chief Digital Officer is the right person for that job. They support the company in reaching its digital transformation objectives by sharing and embedding their vision with the teams. To design the digitization of the company and permanently anchor digital within it, CDOs must take into account all areas of the business. Cultural changes will also include the introduction of new forms of work and the development of agile skills among employees.
Develop and integrate a digital strategyBuilding a well-defined digital transformation strategy with a clear vision of what steps must be taken to achieve it is one of the CDO’s crucial responsibilities. To map and convert traditional processes to digital ones, a CDO works with cross-functional partners and teams, ensuring everyone is on the same page. It’s also a CDO’s job to integrate all relevant digital initiatives with the strategic-planning process for leadership commitment, appropriate allocation of resources, and execute according to the plan.
Work with other teams to build and manage a digital ecosystemA CDO isn’t a lone wolf striding along its own path. They are team players in the first place because if a company wants to be digital, every person on the team involved in transformation should know how to achieve it and what to do to accelerate the process. So a CDO works in collaboration with teams across the business to generate innovative digital solutions for processes, products, services, marketing channels, customer experience, and business models. The CDO traditionally owns and centrally monitors the digital innovation project portfolio, while the deployment of the individual projects may be the task of other executives and teams.
Measure digital effortsInitiating digital change is only half the work; a CDO will have to monitor all the projects and measure whether they are effective and bring value, for example, drive new revenue or improve customer engagement. These things can be measurable, so a CDO should calculate ROI and report the outcomes of the initiated digital projects.
Identify new technologies to support and enhance existing solutionsThe world of tech keeps changing rapidly with new solutions being created daily. As an executive who drives change and leads a business in the direction of becoming digital, a CDO must be informed of new technologies to help with the set goals. This can be anything from CRMs to AI-powered chatbots to IoT systems.
Attract talentA CDO should work with the HR team to retain talent as building digital capabilities across the company is impossible without the right people on a team. As of now, the demand for digital innovation and transformation exceeds the supply of qualified specialists on the market and inside organizations. So a CDO is there to help recruiters find potential candidates to fill in the missing pieces in the staff puzzle.
CDO background: Where do they come from?Since CDOs are in top management positions, there should be a solid educational background. On top of that, in most cases, the expertise includes both tech- and business areas.
For example, Microsoft’s CDO Andrew Wilson holds a Combined Degree in Computer Science and Business Studies from Loughborough University, Leicestershire, in the United Kingdom. Faraz Shafiq, who is a CDO at Amazon Web Services, received a Bachelor's Degree in Computer Science and later got his MBA at UC Berkeley, Haas School of Business.
In most cases, CDOs get promoted to this position from other C-Level roles within the company such as Senior Managing Director, Chief Information Officer, and Chief Data and Analytics Officer. The promotion may depend on the successful implementation of projects in terms of digitization or other recognitions. In addition, management qualities as well as in-depth specialist knowledge and practical experience in the technical and business areas must be proven.
The responsibility of the CDO is huge, so the demands and challenges for the top management member are correspondingly great. It makes sense that most vacancies require more than 15-20 years of experience in this or related roles. In smaller-scale companies, though, the CDO functions are often undertaken by CIOs or even CEOs.
The following table illustrates typical career paths for CDOs working in global enterprises.
Chief Digital Officer career paths in different companiesIt is not that uncommon for such highly qualified executives to be enticed away by headhunters and recruited for another company, which is another way of advancing to CDO.
There is no specific degree course that can attribute the qualification of a CDO. The only things that matter are the multi-year experience in the related fields and "transformer" thinking. However, as we can see from the table, CDOs are required to hold a Master’s degree in business administration, computer science, marketing, communications, or a related field.
What skills and qualifications make a good CDO?The specific requirements for a CDO skillset vary depending on the industry in which they work. This must be taken into account when looking for such a specialist. As of now, let’s look at the skills and qualifications of a good Chief Digital Officer.
CDO hard skills and qualificationsThings like business knowledge, in-depth understanding of digital structures, experience in project management, and comprehensive know-how in areas such as big data, blockchain, AI, IoT, etc. are important for the CDO to do their job. They comprise the base of hard skills a CDO should possess.
Business acumen. As the "voice of the business", this senior role is charged with delivering enhanced productivity and efficiency across a company by leveraging not only technology but also BI and analytics. For this, they must understand the corporate domain, evaluate the situation in the market, and determine profit opportunities.
Extensive understanding of digital structures and products. Digital is the second skin of the CDO. This specialist tests new technologies and wants to understand them as well as their influence on business. The CDO always has his eye on the next new digital trend and decides whether it’s worth a company’s attention. It is important, though, that the CDO can distinguish the real thing from the noise, i.e. be able to separate the trendsetting from the irrelevant.
Broad technology awareness. The focus of the skills of a CDO is in the area of information technology. Many companies want an IT degree for their Chief Digital Officer (if you look at the table, you’ll see that most CDOs have a degree in Computer Science and/or Software engineering in addition to Business Administration). To make better digital transformation decisions, a CDO must know how modern technologies work, including such areas as machine learning, data engineering, and IoT.
Project management. Proven skills in project management — especially in the IT area — are among the top five most frequently mentioned CDO specialist skills. A CDO puts a sharp focus on real business problems, aiming to generate a "funnel" of experiments that can be quickly tested. Digital transformation is also a project, so it's a must for the CDO to be aware of the best practices and methodologies of Agile project management.
Data understanding. Everything that can be digital will become digital. This involves a high reliance on data. Therefore, CDOs must have an excellent understanding of end-to-end data processes as well as understand in detail how a data pipeline should be built in a company when implementing digital products.
CDO soft skills and qualificationsAt the same time, an innovative and disruptive mindset, top-notch communication and presentation skills, and strategic thinking are relevant soft skills for a CDO. Ideally, this specialist brings the perfect mix of technical expertise, business know-how, and leadership skills. Let’s list the main soft skills contributing to the competence of the CDO.
Communication. Both inside and outside the organization, the Chief Digital Officer must be able to convey digital processes and explain their benefits to everyone involved. Especially within the company, the CDO can often become a disruptor as their main task is to change the usual workflows by implementing new ways of doing things. That’s why open and clear communication about what CDOs are trying to improve and why it is important.
High sense of responsibility and perseverance. Introducing and implementing digital transformation involves fundamental changes for the entire company, which is a rocky path that involves many risks. As a CDO plays the role of a change-maker, they must be courageous and responsible enough to dare to start something like that. CDOs must also have the perseverance to drive the transformation forward continuously.
Leadership. The CDO must be a proven leader with experience developing and managing cross-functional teams in a fast-paced, complex, mission-focused environment. They direct, coordinate, and provide leadership to and review the work of professional employees to accomplish operational plans and results. As the CDO promotes a culture of continuous improvement and prioritizes the professional development of all members, he or she must be an inspirational leader for the team.
Strategic thinking. CDOs must have extensive experience not only in leading IT-based business transformation but also building digital-driven business strategies and innovation. This skill is the foundation of any CDO who is adept at overseeing and executing strategic projects. A good CDO is skilled at looking downstream and focusing organizational and team efforts on the big picture and long-term impactful initiatives.
When, why, and how: three key questions organizations need to answer before hiring a CDONow that we’ve dealt with what CDOs are, what their job involves, and what skills are needed to fill in this position gap, it’s time to answer three more equally relevant questions, namely:
- When do companies need a CDO?
- Why is a CDO worth attention?
- How does a company add a CDO role to its C-level board?
When do companies need a CDO?Just because something's there doesn’t mean you grab it mindlessly, right? The same thought process can be applied to the presence of a Chief Digital Officer role. If you run a huge enterprise with multiple departments and your digital transformation is in its infancy, you should definitely look in the direction of hiring a CDO or promoting one of your forward thinkers to this position.
However, smaller organizations with tighter budgets may rearrange their priorities with a CIO, CTO, CMO, or even CEO starting to take on a broader role, including those belonging to the CDO.
At the same time, when bigger-scale companies have already got some sort of digital transformation going on, meaning CDO tasks are handled by other specialists, the need for creating a separate position disappears. And vice versa, small companies with no idea of where to start their digital transformation journey may decide to find someone who knows all the ins and outs of this subject.
Why is a CDO worth attention?Digitization isn’t going anywhere soon. Want it or not, businesses need to invest in digital activities to stay competitive. Integrating one application can make a huge difference. And it’s not integrating any software, it’s about knowing all business needs and finding the perfect solution to enable digitalization. The Chief Digital Officer (CDO) ensures that digital activities align with and support the strategy of the overall organization. Since many companies still have gaps in the adoption of the digital world, the CDO role will continue to be in high demand.
About 15 years into the existence of the CDO position, the role is still hotly debated and researchers discuss the CDO's role profile, their contribution to digital transformation, and future prospects for the CDO position in terms of its potential disappearance or the promotion of CDOs to other top executive roles.
How does a company add a CDO role to its C-level board?There are different variants of how the position of the CDO or “transformer in chief” can be anchored.
Scenario 1: Creation of a new digital-focused department. With the appointment of a CDO to the corporate executive level, a new department is created in the management board. This expresses the fact that it is not about managing the digital capability of the company per se, but about the massive future-oriented expansion of digital capabilities.
Scenario 2: Promotion of an existing manager role. The promotion of a top manager to be responsible for digital transformation makes it clear to the entire organization that the current strategy is reprioritized to digital. The organizational structure can remain largely unchanged. This leads to only minor changes in functions in the company. Behind this decision is usually the desire to open up new markets and develop more innovative products. This scenario is intended to show employees that the company is on the right track and that digitalization is already playing an important role in this.
Scenario 3. Merging specialist teams. If digital projects are already widely distributed across the company, their managers can be brought together to form a digital team and share responsibility for their part of the work. As a result, the employees who deal with digital are centralized but remain in their traditional areas. Structure and organization remain largely unaffected in this variant.