The rise of the Chief Digital Officer has so far been most noticeable in the USA with a number of large companies appointing them.
The perceived need for a CDO is typically to try and accelerate digital transformation and to bridge the divide that can exist between the CMO and CIO.
Gartner recently predicted that by 2017 the CMO will spend more on IT than the CIO. Much of that technology is for digital and ecommerce initiatives.
If the CMO is not comfortable with these new responsibilities, a CDO is seen as a solution.
Only around five years ago we would constantly hear from our most senior digital subscribers that they were struggling to convince the ‘C-suite’ to invest properly in digital and treat it in the strategic manner it deserved.
Wind forward five years, with several recessions, numerous high profile bankruptcies and entire business models under serious threat, and the picture is very different. Digital’s ‘battle for the boardroom’ has been won. The case for investment in digital is not the challenge.
Indeed, the board have their shareholders breathing down their necks impatient for faster business transformation with digital the primary catalyst and driver.
The challenge, and the frustration, for larger companies in particular is the lack of speed of change. Executing on the digital imperative, innovating in an agile way, changing the culture: these are now the biggest challenges, not strategic commitment or C-level buy-in.
One approach some companies adopt to address these challenges is to buy a start-up in the hope that this will drive change. However, this rarely works out well as the clash of cultures is usually too great.
The appointment of a CDO seems to be another route companies are taking in the hope this will deliver the desired digital change. But I believe this is a bad idea. It is a short term sticking plaster over a more serious underlying problem.
It is essentially an admission of failure. A failure of the rest of the C-suite to be themselves digital enough, or a failure to empower the digital teams properly within the organisation, or a failure of the various business functions to work together to make digital happen.
Furthermore, as digital touches so many parts of an organisation, the only way for it to be ultimately successful is for it to be collaborative, and permeate everything, so concentrating authority into a single C-level position is counter-productive.
If a CDO is not the right solution, what is?
Digital is undeniably now a strategic issue rather than a tactical one and merits championing at the highest levels so how can digital transformation be achieved without a dedicated CDO?
Firstly, and most obviously, it should be possible to have C-level executives who understand digital well enough that there is no need for a CDO. There is a noticeable trend for executives with digital expertise being promoted not just to CMO but to the CEO role.
Jonathon Brown moved from Director of Online at John Lewis to CEO of M and M Direct having had various digital and brand marketing roles previously. Ashley Highfield became CEO of Johnston Press with a background of digital roles including MD and VP Consumer and Online UK for Microsoft and Director of New Media & Technology at the BBC.
Typically to make this jump candidates have had roles and responsibilities that are not just digital but across multiple channels and they need leadership, commercial and strategy skills. But this seems a far better solution than having a CDO?
Secondly, even if the C-suite themselves are not well versed in digital, not having experienced it first hand through their career, I believe it is beholden upon them to learn about digital. If this is the case then, again, there should be no need for a CDO in whom all digital knowledge and authority is entrusted.
Enlightened C-level executives, not just the CMO, CTO or CEO, but finance, HR and other functions are confident enough in themselves to admit they may not understand digital but are willing to learn. This learning may not just be the usual workshops, away days, digital immersion sessions, trips to Silicon Valley. It could also include having a digital mentor, or digital ‘buddy’ who may be quite junior, to experience digital first hand.
Thirdly, if the C-suite properly empower those with digital skills and experience who are perhaps one, or two, levels beneath them, then a CDO is not needed. Rupert Murdoch has gone on record as saying he feels too old to ever truly understand digital but he is smart enough to recognise its commercial importance and empower others in his organisation who do.
In many organisations now we are seeing those with digital expertise being moved up the ranks into multichannel and wider roles that surely position them for a step into the C-suite soon. Laura Wade-Gery moved from being CEO of Tesco.com to Executive Director, Multi-channel Ecommerce at M&S, joining the board in 2011.
Andy Harding has recently become Executive Director, Multichannel at House of Fraser having been in various digital and ecommerce roles previously. It is these kinds of senior managers, who understand digital and will become the C-suite if they are not already, that companies need, not a CDO.
In the early 1900s some companies hired Chief Electricity Officers because at the time electricity was so new and so important it was thought necessary to have someone at board-level oversee it. We can look back now and chuckle at the idea of a Chief Electricity Officer.
Perhaps Chief Digital Officers are the Chief Electricity Officers of our age?