Criticism of the Chief Digital Officer (CDO) role centres on its necessity in executive team and that it creates another organisational silo.

However, does Adam Brotman's success as CDO at Starbucks highlight that there is in fact a strong case for organisations to appoint consider appointing one? 

Execution, not vision, is the challenge

Two years ago, Ashley Friedlein penned his views on the new role of CDO. His point was that creating a vision of what digital can achieve for a business isn't the issue. It's the execution of that vision that is the real challenge. 

The reason for this is that digital transformation should touch every part of a business. Therefore it requires alignment of Executives across different functions. By having a single CDO in charge of digital transformation there's a risk that digital initiatives are executed in a silo and fail to extend across the entire organisation.

It's a sensible conclusion and, based on the comments from Ashley's post, many agree. 

Further articles have expressed their view that CDO's divide the board, highlight management's digital ineptitude, steal the strategic element of a CIO or CMOs role, and create a new organisational silo that overlaps marketing and IT. 

An interim position

Those in the role have expressed their own belief that the role is largely an interim role designed to give businesses a much needed kick forward.

Pascal Moyon currently serves as the Chief Digital Officer at LastMinute.com. His view is that CDOs fulfil a vital role in bringing together the business units. 

Digital Transformation requires strong coordination of different business units and the CDO helps by doing the heavy lifting. Pascal also sees one of the big challenges of the CDO being to resolve legacy IT issues and pave the way for a future digital platform. 

Reflecting on his own experience Pascal said:

CDO positions highlight a gap in skills/vision in companies, as CMOs traditionally are not necessary au fait with the technical intricacies around digital. The CDO job is transformational and educational. CDO are there to help the company understand the nature of the digital world which shrinks both the distance and time between a company and their customers.

Digital brings back companies to the root of marketing: delivering a consistent product and experience to the customers and communicating effectively. To avoid silos or internal power play CDOs should not have their own agenda, with a strong case for interim management.

As a task, this is something a CIO/CTO could, or perhaps even should, take the lead at doing. The reality can be that their workload is too great and they need the support of a CDO.

The digital CEO

Also we shouldn't forget the importance of having a CEO or board who are fully behind digital. Ashley's argument that the board needs to be digitally savvy was supported in Leading Digital, a recent book published by the Harvard on Digital Transformation. 

When CEOs get the board's energy behind a digital vision, incredible results are generated. Angela Ahrendts' time as Burberry's CEO is the crucial of this fact.

On the other hand, those in favour of the role talk about the CDOs ability to bring the focus and experience to drive forward digital transformation. This is a role that requires them to be a leader-cum-evangelist who is comfortable talking about data, technology, marketing and the customer experience. 

Due to this multi-disciplinary requirement, the role of CDO has also been renamed as Chief Marketing Technologist. However this role may create too narrow a remit for the wide ranging expectations of digital transformation.

Both sides of the argument

Personally I can see the arguments on both sides.

Those for the CDO make a good point that they bring a blend of skills that make them a hybrid of CMO and CIO. Similarly, I agree that the CDO can create another silo in an organisation where digital needs to be ubiquitous. 

Based on these arguments, it appears that businesses need to work out if they need the skills a CDO can bring and then, if they do hire one, define their role very carefully to ensure that they are able to work across the entire organisation.

Starbucks

Starbucks has provided a good example of how to make the CDO role work. Adam Brotman was appointed as CDO in 2009 and has been instrumental in driving forward a number of digital enhancements to the customer experience.

Three of Brotman's projects are the loyalty card (estimated to have produced $3bn in transactions), pay in advance on mobile, and wireless device charging.

Whilst one may challenge the practicality of the third, the first two initiatives have served to deepen the customer relationship and improve performance.

On this latter point of improving performance, Starbucks has applied sound analytics in their selection of POS vendors. By putting the right POS system in place, Starbucks have been able to shave time off customer wait time and improve the experience.  

Vital background to Starbucks' digital leadership is that Howard Schultz, CEO of Starbucks, is fully behind digital as part of a five year plan to accelerate profitable growth. Brotman's role is not to replace a holistic digital strategy but to make it happen.

In fact interviews with Brotman and the CIO (Curt Garner) show how the CDO/CIO role is a symbiotic one with a clear division of projects and responsibilities. 

Have Starbucks done what it takes to be a digital leader? 

Research by MIT found that digital leaders are more profitable and generate revenue more efficiently than those who have not implemented or integrated digital (I've written more about this here). 

In the case of Starbucks,  net profit margin is 14% which puts it in the top quarter of US companies. In terms of revenue efficiency a good measure to use is revenue per employee (RPE) and return on assets (ROA) as it allows direct comparison with other companies.  

RPE at Starbucks is $86k and ROA is 42%. The ROA is particularly striking as it is ahead of Apple (18%) and Google's (12%) figures.

I'd say that this shows a very healthy company who is making a difference to the customer experience. It's a company showing the signs of Digital Leadership.

Drawing conclusions

Whilst I see the logic in arguments against the role, it seems to me that many of the concerns could be attributed to other problems in an organisation.

For example, if we're concerned that the CDO will create a digital silo, then perhaps that's an issue of collaboration in a business. Leaders are so concerned with their own empire, that they're unwilling to pull together.  

Taking this further the issue may not be with the role itself but with the people in existing leadership roles or in fact the person who takes on the CDO role. I'm reminded of the good advice in Good to Great that we should focus on getting the right people on the bus (and the wrong ones off) before working out who is sitting in each seat.

Perhaps Adam Brotman would have succeeded at Starbucks regardless of whether his job title was Chief Digital Officer, CIO, CTO, Head of Digital Programmes, CCO or something else entirely.

Starbucks is one strong example that shows that we can't write off the CDO role. CDOs can work well with CIOs, they don't always create silos and they can make an overall difference to the customer experience. 

This isn't to say that former arguments are incorrect. Perhaps they were just premature in drawing conclusions.  

Making the CDO role work appears to be a case of finding the right person, defining the role well, having a digital transformation agenda and then supporting collaboration across business areas.

David Sealey

Published 25 May, 2015 by David Sealey

David Sealey is Head of Digital Consulting at CACI and a contributor to Econsultancy. You can find David on Twitter or LinkedIn

6 more posts from this author

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Comments (4)

George Cole

George Cole, Digital Marketing Manager at TN

I love the idea of a CDO role within an organistion - and I wholeheartedly agree that "Execution, not vision, is the challenge". I guess its the same in many areas of business, but it's easy to have a vision of how things could be digitally, without having the supporting experience or technical knowledge to know how practical that vision is and how to achieve it. Whilst there is a danger that a CDO could potentially discount some elements of the business's digital vision from a pragmatic point of view, I think that every organisation needs a passionate, informed, digital advocate who joins the dots and stimulates action. Considering changing my job desc to CDO now ;)

about 3 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at EconsultancyStaff

Thanks for keeping the debate alive David... ;)

In my recent piece on Marketing Week ("Are we witnessing a reverse takeover of marketing by digital?" at http://www.marketingweek.com/2015/05/18/our-modern-marketing-manifesto-revisited/) I described the CDO job title as apparently somewhat stillborn.

However, this data - http://cdoclub.com/cdo-club-holds-3rd-annual-nyc-chief-digital-officer-summit/ - seems to show the opposite. It is from the CDO Club so might be somewhat partisan but there are plenty of good examples given and they forecasts that the number of global CDOs will double again in 2015, to some 2,000 CDOs by the end of the year.

However, I still stick by my original thinking. You quote Pascal as saying that "CMOs traditionally are not necessary au fait with the technical intricacies around digital". Traditionally perhaps, yes. But that was the point of my modern marketing manifesto (https://econsultancy.com/blog/62668-our-modern-marketing-manifesto-will-you-sign/) - I just think it is no longer acceptable for a CMO not to have a good enough understanding of digital such that a CDO fudge is needed.

My other point (made in "Why marketers should become CEOs" - https://econsultancy.com/blog/63889-why-marketers-should-become-ceos) is that the person who really gets digital and marketing should probably be the CEO, not just the CMO. What is most interesting about the CDO Club data is not that there are more CDOs but that they are rapidly becoming CEOs: "as many CDOs were elevated to CEO and Board Directors in Q1 2015 as in all of 2014."

Starbucks have done some great stuff in the realm of digital and I'm sure Adam Brotman is excellent. But I believe the reason they have made it happen is because of Howard Schultz's commitment to it (i.e. CEO) and not because they have a CDO. If you read about Howard's move early last year (e.g. http://www.marketwatch.com/story/starbucks-ceo-schultz-expands-role-to-digital-2014-01-29) you can see that he basically is the CDO.

I'm sure we will see more CDOs but I still think that is an admission of management failure a) to see digital coming earlier and b) to become sufficiently 'digital' themselves. Between the CEO, CMO and CIO/CTO, a business should be able to drive the digital agenda and transformation forward.

about 3 years ago

Joe Tarragano

Joe Tarragano, Group Managing Director at Pentagon

Good debate.

A nuance I'd add is that while the talk is of digitally savvy marketeers, or hybrid IT types who get the customer, a third leg would be the operations leadership. In retail, delivering a compelling, profitable customer experience requires engagement from supply chain and from store ops. It is rare that the marketing team truly appreciate the difficulties within the key enabling function of the supply chain, nor understands the challenges of delivering the the moments of truth through people and within the physical spaces. Breaking down all these silos and delivering a service design that is truly end-to-end and delivers a commercially sound cross-channel experience requires a very broad set of experiences and expertise. For this reason, an interim CDO or a management consulting solution can be the right way to deliver that breadth. And the task then is to effect the transformation and to leave behind a culture, process & technology legacy that makes that interim or consulting team redundant.

about 3 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at EconsultancyStaff

@Joe Entirely agree about the importance of operations. All very well having nice 'joined up' ideas but you've got to make them a reality. That's why in my post on organisational structure (https://econsultancy.com/blog/66223-with-a-blank-sheet-what-organisational-structure-would-you-choose-for-marketing-and-digital/) I have the Operations Director and COO very much as equals partners with the Customer Director/CCO.

about 3 years ago

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