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How Middle-Market Companies Can Benefit from Having a Chief Digital Officer

At a time when large companies are expanding their digital strategies, it's more important than ever for middle-market firms to try to stay with the pack.

GettyImages-187091508 (1)Digital strategies now span every aspect of business from marketing to human performance and guide everything from interaction with customers to growth, innovation and efficiency.

While the growth of digital strategies is still in their infancy, a wave of digitalization is “sweeping the globe,” says Jay Scanlan, leader of McKinsey’s Digital Strategy Practice. Scanlan noted in a recent McKinsey Quarterly that since it will change how so many companies operate, a successful future could hinge on how well and how quickly companies can transition to digital.

Mark McDonald, managing director of Digital Strategy at Accenture said executives without an appreciation of digital principles undermine their future competitiveness. He said companies that simply re-automate past products and practices on a new sheet of glass without realizing there is more to digital than apps and analytic reporting are missing out. “The result is growth in digital transaction channels and pseudo engagement, without attracting new customers, increasing products per person or relationship size,” says McDonald.

Not surprisingly, large companies are leading this trend. CXOTalk identified 20 influential CDOs, including Adam Brotman at Starbucks, Jeremy Phillips at the Motley Fool, Lubomira Rochet at L’Oreal, Atif Rafiq at McDonald’s, and Daniel Heaf at Burberry.

The fact that large companies are investing trillions in next-generation Internet technology should be a “wake up call” to middle-market firms, Peter Bowman told a meeting of the Internet Advisory Board. Bowman said we’re entering the phase of the digital economy where organizations need to “get their online house in order.” He said middle-market companies need a solid and effective digital strategy that does not bleed their budget, increase risk, or create a loss of opportunity. “The time has come to develop a practical digital strategy and execute it online with fewer mistakes and more performance-oriented results,” Bowman said.

“We believe that less-advanced companies could clearly profit by hiring one top executive to develop and carry out a coherent digital strategy.”

Some companies are hiring C-suite level roles to implement and manage their digital transitions. A recent PwC report showed that while only 6% of companies surveyed had a CDO in place in 2015, the rate is growing. It found that those that had one in place were more likely to be consumer-oriented companies in entertainment, food/beverage, retail, insurance and transportation. The report also noted that the less digitalized a company is, the more they could benefit by hiring a CDO. “We believe that less-advanced companies could clearly profit by hiring one top executive to develop and carry out a coherent digital strategy,” PwC said.

Meanwhile, McKinsey said companies bring in a chief digital officer for two primary reasons. The first is when they need to approach complex root causes that must be understood and addressed before progress on digitization can be made. The second is when the CEO realizes the organization can’t meet the challenge of transformation with its current C-suite. “By its very nature, a high-functioning digital company does not need a CDO,” McKinsey said.

While most notable and influential CDOs have been at large organizations, middle-market companies can mimic their success by having one.


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