Could it be Time to Hire a Chief Digital Officer?

Johann Jungwirth, pictured on screen, is the chief digital officer of Volkswagen in Germany.

For many companies, the composition of their C-suite is starting to resemble a bowl of alphabet soup. And given the immense pressure that management is under to adapt to the digital age, it’s not surprising that CDOs have become an increasingly popular ingredient.

So what exactly do Chief Digital Officers do and why do you need one?

A precise definition may depend on who you ask, but CDOs are generally given responsibility for identifying digital business opportunities and overseeing the changes needed to take them.

“25% of medium-sized to large companies now have a CDO, up from 18% in 2016 and 17% in 2015.”

Management consultancy McKinsey has called the CDO the “transformer in chief”, charged with managing comprehensive changes that address everything from updating how a company works to building out entirely new businesses.

A quarter of medium-sized to large companies now have a CDO, according to a survey of 4,498 CIOs across 86 countries released this week by Harvey Nash and KPMG. That’s up from 18% last year and 17% in 2015.

“After something of a lull last year, CDO roles are being filled in ever greater numbers,” said Harvey Nash’s Jonathan Mitchell, who noted there’s now three times as many CDOs around than there were three years ago.

The advance of the CDO is somewhat controversial. Functions can, and often do, overlap with many of those performed by other senior executives, such as Chief Information Officers, Chief Customer Officers, Chief Marketing Officers and Chief Strategy Officers. So the capacity for power struggles is large.

Some CIOs aren’t happy, including SAIC’s Bob Fecteau. He recently told the Enterprisers Project that CDOs and similar positions like Chief Knowledge Officers indicate that people like himself aren’t fully empowered or trusted.

“Efforts to separate job responsibilities of the CIO like these serve to dilute the authority, the budget and the scope of the CIO’s responsibility,” Fecteau said. “It is imperative that we as leaders stop endorsing them in IT forums, publications and conferences as solution concepts that business leaders need and want to attempt or adopt.”

Unfortunately for the likes of Fecteau, hiring trends aren’t on his side, particularly in consumer-facing sectors such as media and retailing, which various studies show have the highest proportion of CDOs.

His concerns, however, are valid and companies tempted to hop aboard the CDO bandwagon must be prepared to mitigate against the risk of executive disputes, role duplication and strategy confusion.

An obvious solution would be to hire a CDO with good people skills. Far more critically, however, clear direction around task definition and role co-ordination needs to come from the most important three-letter combination in the mix: the CEO.

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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