What it means when your company hires a chief digital officer
The chief digital officer (CDO) role is on the rise in the C-suite. Companies that are considering hiring a CDO believe they need an empowered leader to drive business growth by accelerating the integration of digital across the organization, shifting the business away from existing models and infrastructure, and breaking internal departmental silos. In its 2014 CEO survey of 410 CEOs and senior business executives, Gartner found that “20 percent of large organizations’ CEOs have already involved a data officer in leading their organization’s digital innovation.” They also predicted that “25 percent of organizations will have a CDO by 2017, with that figure rising to 50 percent in heavily regulated industries such as banking and insurance.”
However, there is some disagreement about whether CDOs are here to stay or if they are just a transitional phase, with Forrester reporting that only 1 percent of companies planned to hire a CDO during the past year.1 Regardless of the future of the CDO, this new role is a symptom of larger disruptions in marketing and technology that should not be ignored.
CDOs are a sign of organizational transformation
The CDO is often brought in to fill a skills gap in digital, or to take on the responsibilities of digital transformation and culture change when the rest of the C-suite is focused more on running their departments. CDOs can help translate between marketing and IT when tensions between the CMO and CIO preclude a successful partnership.
However, some analysts have argued that if CDOs are successful at their jobs, their role will become redundant once digital is integrated across all business activities, similar to the rise and fall of chief electricity officers in the early 20th century. While the advertising and media industries were some of the earliest to adopt CDOs due to an explosion of digital content, a handful of advertising and media CDOs have transitioned to become CEO.
The CDO role is fluid and context-dependent
CDOs come in a variety of forms, depending on industry challenges and company needs. For example, a recent Constellation Research study found that CDOs should focus on product innovation for information-based industries, capability building for service-based industries, and customer experience for industries with physical brick-and-mortar customer touch points.
We have heard a range of CEO expectations and CDO mandates at Deloitte Greenhouse’s CDO Transition Lab. As a result there is a lack of clarity on what exactly the CDO role and reporting structure should look like. Rather than getting caught up in defining a one-size-fits-all description of a CDO, companies should look inwardly to determine which type of digital officer their organization needs, and expect that the role will continue to evolve over time.
What does this new role mean for the CMO?
Wired quoted a CMO who stated that “the CDO is the CMO of the future.” In Deloitte’s work with Fortune 500 CMOs on their 2020 visions, we often heard their aspirations to transform their organization archetype to be “the digerati” (digital first) or “experience-led innovators.” So, it is not surprising that a recent study by Constellation Research found that tech-savvy CMOs of consumer-facing brands often transitioned into the CDO role for their company. For CMOs who have a background in creating new digital business models and experiences and a deep understanding of strategy and analytics, taking on the responsibility of digital—whether or not it includes a CDO title change—can effectively increase their influence in the C-suite and impact on the overall business.
CMOs who do not transition to the CDO role should partner closely with the CDO, viewing them as valuable resource to build stronger connections with IT, and to accomplish the end goal of digital integration with a focus on the customer. While developing digital capabilities separately can be helpful in the early stages, it should eventually integrate with the rest of the company’s functions. When organizations look at the customers first, and then see how digital can meet customers needs, that’s the beginning of integrated marketing.
If that doesn’t happen, companies run the risk of driving broken customer experiences and poorer business results.
Published on September 14, 2015.
1Forrester Research, Inc., ”Trends 2014: Staffing and hiring for eBusiness,” May 15, 2014, https://www.forrester.com/report/Trends+2014+Staffing+And+Hiring+For+eBusiness/-/E-RES115945.