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 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.
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.