There are many roles in the corporate world that have followed the same hyperbolic transition from “head of x” to “chief x officer,” often while denoting a fairly similar level of seniority and set of responsibilities.
There are chief change officers, for example, and even chief inspiration officers, according to this post. But for corporate IT teams, one example has cropped up time and again in the past few years: the chief digital officer.
Apart from the hype and confusion around how the role should be defined, there is considerable uncertainty about how many CDOs are out there. To make things even more confusing, CDO currently has two meanings – chief digital officer and chief data officer – although chief digital officer seems to be more common.
According to data from PwC the number of companies that have hired a CDO remains small: Only 6% of the top 1,500 companies globally had hired a CDO by the end of 2015. When CEB asked 22 European CIOs in London whether their companies have a CDO or equivalent role, only one raised his hand, and then only to explain that it’s actually the company’s chief operating officer who performs the role.
Most Firms Don’t Need a CDO
That show of hands sums up the situation. From conversations with over 100 CIOs across the past few months, it’s clear that the responsibilities associated with CDOs (i.e., defining and driving the company’s digital agenda or strategy) are best left to existing leadership roles.
Often, CIOs now find themselves evangelizing new digital opportunities and working with senior leaders across the company to get everyone on the same page about digitization. Many are already starting to use their cross-functional vantage point to push through the company-wide changes needed to follow a successful digital strategy.
Three Reasons Why You Don’t Want to Hire a CDO
Most senior managers believe that their companies should broaden the scope of digitization to remain competitive, including up to the point when digital concepts and ways of working will be integrated into all aspects of the company. And there are three reasons (and one possible exception) for why hiring a CDO may well delay that moment.
- Misaligned incentives: A separate digital leadership role will struggle to promote company-wide collaboration for cross-cutting digitization initiatives.Embedding digital objectives in enterprise and business unit strategies, for instance, requires involvement from the vast majority of the senior executive team.
- Greater complexity: Dedicated digital leadership roles (and the teams around them) create new organizational siloes, increasing coordination costs and decision-making complexity.For important cross-cutting initiatives like digitization, it is far better if the senior leadership team takes responsibility for finding and fixing where collaboration breaks down and making sure any necessary handoffs from one team to another are as efficient as possible.
- “Someone else’s job” mindset: Assigning digitization to one individual or team may deter employees throughout the rest of the firm.Organizations that expect all members of the senior team to play their part can marshal the entire organization toward digital transformation, not just a select few.
Although the role of encouraging and accelerating digital transformation should be performed by a close-knit leadership team, the one exception may be in developing digitally-enabled products. This is because a separate leadership role is often better positioned to protect funding for digital products or services by shielding them from the performance expectations that govern the existing business portfolio.
On the other hand, there’s no real reason for why that role cannot be found around today’s top tables. Right now, several of the world’s leading CIOs already have responsibility for their firm’s digital products.
Raf Gelders is a research director for CEB CIO Leadership Council and supports CIOs at leading global companies. Read more CEB blogs here.
