When digitalisation and digital transformation became hot topics several years ago, many companies that didn’t know how to deal with the subject or that had CIOs who were overwhelmed by the digitalisation challenge simply appointed a Chief Digital Officer (CDO) and hoped that he/she would solve their digitalisation problems.
Technology is transforming and redefining the future of every business, and as a result it has become part of every company’s core strategic assets, just as human capital and financial resources are. While every leader is of course expected to know how to deal with people and financial resources, it is still widely accepted that technology issues can be delegated to a separate instance or person, because many leaders are still ignorant of, or overwhelmed by the topic. Whether the task is delegated to a CTO, a CIO or a CDO makes no material difference, the pattern is still the same: technology is not considered a strategic asset and is still not seen as a key component of the business, meaning that it can be delegated to someone else. With the growing requirement for digitalisation, many companies try to fill the void by hiring a CDO.
CDOs are hired to drive a company’s digital agenda, but they then often seek to build their own “empire”. This is because most of these “experienced leaders” are still traditional hierarchical managers and not the networked leaders that would be required for such a role in the digital and networked economy. They often work on building a digital business unit that offers digital products and services to the market that are separate from the established business, and this starts to create competition with the traditional business. It also creates tension and internal friction that paralyse the company with massive internal politics rather than improve the company’s competitive positioning in the market.
With the growing acceptance that IT has become a key strategic component of every business, together with the undisputed need for digitalisation in order for companies to remain competitive, I believe that the time of the CDO is over! Most companies are moving away from the concept of a CDO, because they have realised that digitalisation cannot be established as a separate discipline with a separate organisation, often competing with the traditional business. While a well-established and business-driven CIO can act as an enabler of digitalisation and as a catalyst to help his/her business colleagues become more digital, ultimately every leader needs to become a digital leader herself/himself. Technology is so strategic to every business that ownership over technology can no longer be delegated to a CIO or CDO.
In recent years, there have been many articles about new CxO roles that were invented and introduced when the “x” topic became so important and strategic to the business. The German car manufacturer VW introduced a Chief Software Officer in early 2019 because it realised that with the virtualisation of physical objects, more hardware is moving into SW and therefore SW is becoming extremely important to its business. Others, seeing that no one was dealing with the digitalisation of their products, introduced a Chief IoT Officer, again others a Chief Transformation Officer, a Chief Innovation Officer, a Chief Data Officer, a Chief Cybersecurity Officer, etc., etc. It seemed like whenever someone in the company wasn’t doing her/his job properly or got stuck in the past, the company simply created a new CxO role to deal with the void instead of questioning whether the existing C-level leaders were still focussing on the most important topics for the company. As a result, they risk ending up with a whole plethora of such C-IDIOT-Os instead of reshaping what they expect from their existing leaders.
If a business-minded CIO is successful in driving the digital agenda, in championing innovation through technology, in enabling the business to become digital, in building up the required digital competence as a core element of the business, in helping business colleagues to adapt digital leadership and learn how to lead in network structures, then there is no need for a CDO. I tend to say that if a company hires a CDO, then the CIO hasn’t done her/his job properly – at least not the job that is expected of a modern and future-minded CIO, which might not be what the outdated job description shows, that was written decades ago.. However, the CIO role needs to change as well. Otherwise, just as has happened with CDOs, CIOs will become obsolete when business units become more digital themselves.
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Patrick Naef | 15.05.2020