Digital leaders hired to disrupt business

A growing number of companies are embracing the need for strong CDOs

by HABHAJAN SINGH

Digital transformation is impacting companies and financial institutions in more ways than one. What exactly is the role of the chief digital officer (CDO), a designation that has gained currency in the last few years?

The CDO is supposed to disrupt their organisation’s business, suggested a top consultant in the country.

“But people (incorrectly perhaps) closely link this role with the CIO. Given the complexity of big business today, just what sort of individual is suitable for that role you think — internal or external?,” added Accenture Malaysia country MD Azwan Baharuddin (picture).

He posed another query: If you were a startup and were targeting a specific enterprise, do you go to the CDO first?

His musings on the social media received a number of interesting responses, a sure sign that the topic is of interest to many executives out there.

In one comment, a local executive suggested that the description of the title would vary and that it is a transformational role, depending on respective organisation structure and its direction.

“I would think that this person would need to be not just a digital expert but also someone who is also a seasoned general/operations manager. As for internal or external candidate — I reckon sourcing externally as an option only if there is no suitable candidate internally,” she said.

At the end of the day, she added that disruption or transformation is not one person’s job.

“We can bring in the best person to do the work, but if the rest of the stakeholders are not on the same page, it’s back to square one,” she added.

Another reader agreed. He commented that the “glamorous” job of disrupting the organisation’s business should not lie on the shoulder of one person, rather it is an accountability that lies first with the “C” level.

Who is a CDO?

Let us backtrack a little. How do we define the role and responsibilities of a CDO? Consulting firm PricewaterhouseCoopers (PwC) had surveyed 2,500 large public companies globally last year to understand better on the roles of the CDOs.

The impetus for the service was the fact that faced with organisational challenges, more and more companies were hiring executives to manage their digital transformation.

The first hurdle is deciding who gets captured in the net. PwC used the title CDO to refer to any executive tasked with putting into practice the digital ambition of his or her company or business unit. This could be a high-level member of the C-suite — a CDO, chief technology officer

(CTO), or chief information officer (CIO), among other roles. However, it noted that some companies have a VP or director of digital operations leading the effort.

The study found that a growing number of companies have embraced the need for strong digital leaders. The 2016 study revealed that 19% of these companies had now designated an executive to lead their digital agenda, up from just 6% of companies in its study the year before.

And it is seeing an uptick in the recent years with 60% of the digital leaders it identified in its most recent study having been appointed since 2015.

“Such trends reflect the movement at many companies toward a state of more advanced digital competence. In our experience, it is typically at this stage that top management becomes focused on the need for digital leadership,” according to the report.

In the early days of a business, it noted that different business units and corporate functions conduct scattershot experiments and pilot programmes in hopes of kick-starting their digital efforts. But once a company decides to design a coherent, comprehensive strategy to capture the benefits of digitisation, that decentralised approach will no longer suffice.

“When it comes to implementing a digital strategy, the new class of CDOs often encounter several major obstacles upon assuming their role: Ad hoc digital initiatives spread throughout a large organisation, lacking central oversight; a traditional culture that resists change; a gap in the talent required; and legacy systems and structures that threaten to derail their ambitions.

“The right CDO for your company will have the background and experience to tackle these issues. The mix of requisite skills won’t look the same at every company, but will enable a CDO to lead your organisation’s digital transformation, to the point at which fundamental changes in organisation, governance, capabilities, business processes, underlying technology architecture, and culture take hold,” it added.

The Trio: CMO, CIO, CEO

In another report on CDOs, Deloitte noted that more boards and executive teams recognise that driving digital transformation is part chief marketing officer (CMO), part CIO, part chief strategy officer and part CEO.

“As an enabler who complements the mandates of their peers, the CDO has the unique ability to unite an executive team. CDOs think holistically about how a company’s strategy is executed across all digital channels. They own and drive digital strategy throughout the organisation to help business unit leaders unlock value. In support of our case for a CDO, we have identified the value which the role can bring to others at the table,” according to the report.

The report brings some insight from a bank. TD Bank Group (Canada) CDO Rizwan Khalfan was asked how does the CDO role complement other C-suite roles at bank, particularly the CMO and CIO.

“All three of us sit at the same table and report to the same person, which is a great start in focusing us on collaboration, partnerships and using our expertise to drive what’s right for the customer. There is some overlap, but we all share the same objectives, so that helps resolve issues and move things forward,” he was quoted in the report.

The Deloitte report, however, makes an interesting observation. CDOs may be out of fashion not too long from now.

“Ironically, we see the current role of CDOs and their teams as temporary. For many industries, digital will become so infused with the business that it will make no more sense to have a separate leader and separate team than it does now to have a chief email officer.

“This temporary title inflation will soon be followed with a title deflation that sees the digital team become a non-strategic operations group managing content, platforms and apps. Even more provocative is the notion that the CDO will be the presumptive heir to the CEO throne as digital business becomes more prominent and complex,” the report suggested.

The idea that CDOs may soon phase out probably sits well with another comment that Accenture’s Azwan received for his musing.

“CDO is a fabrication,” suggested the comment by the executive from India. “You only need a CIO and a CTO. A CIO manages the current stack, and the CTO focuses on the pipeline.”