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The Chief Digital Officer, you may not need one.

by Mark P. McDonald  |  March 6, 2013  |  4 Comments

Digitalization requires a type of collaboration that spans the organization to create a digital edge based on an integrated customer experience. The idea of a ‘chief” role responsible for a specific aspect of the enterprise is not new but its getting a lot of attention and discussion.  While it is easy to make the case that there needs to be a new C level role, it is more important to ask the question – do you really need one?

The external reasons to create a CDO may not be the internal reasons why you need a CDO

Industry advocates, solution providers, media and executives have a vested interest in creating a new ‘C’ level role.  A CDO gives advocates an audience, providers a buyer to sell to, editors a market to advertise to and a the executive an opportunity to extend their powerbase.  Counter balancing these forces of ‘conventional’ wisdom can be difficult as its may be easier to give in and go along than choose to invest in the executive collaboration required to create digital capability.

The idea of creating a Czar or ‘C’ level officer is not new.  Organizations have created similar, specialized, and cross-functional roles before. During the late 1990’s a focus on business processes lead many to create a Chief Process Officer role, E-commerce and the Internet led many others to create similar roles around those technologies, such as Chief Internet Officer or President of E-Commerce Czar.  You need to ask yourself where these roles are today in making your decision about a new role.

Consider creating a formal CDO in situations where the organization does not have sufficient cross-operational and functional collaboration to create digital resources and solutions.  This can be the case in the following situations:

  • If the organization works along formal and strict functional lines, with clear and non- overlapping responsibilities.  If things only get done when it is somebody’s job, then you may need a single digital accountability center.
  • If the organization sees itself as a collection of individual operations, business units, channels or lines of business, then it is not an enterprise and will not make decisions or take actions that benefit the whole. Then you need to create an individual executive, operation and overlay to get something done.
  • If the organization has fragmented customer experience, products and channels that require greater integration to produce greater results, then you need to have a clear responsibility center for the digital customer experience.
  • If your organizational culture requires a specific and identified leader to champion change and integration, then you cannot go against your culture.  Create a digital prince to work with the other princes in the executive office.

Given the attention around digital marketing, mobile, social and analytics there is a hype that supports a desire to have a single person responsible or a single throat to choke should you fail to meet digital goals.  After all the logic goes ‘if it is important enough to have, it is important enough to have senior executive in charge.’  If the situations above apply, then consider creating a formal Chief Digital Officer, as your organization needs a single focal point to drive transformation.

Concentrating authority in a single ‘C’ level role does not reflect the collaboration required to create digital resources and solutions

Don’t fall into the trap that you have to have a CDO because everyone else does.  You may not need a CDO according to the case studies explored in our book The Digital Edge. Digital solutions require a deeper level of cross-operational collaboration what can be normally achieved via concentrating authority in a single ‘C’ level czar.

Creating a digital solution is not the same as re-engineering a business process or creating an eCommerce channel.  In these cases, organizations needed a focused “C” Level executive to drive the design, development and deployment of solutions that required mandating compliance to realize results.  Consider the requirement to consolidate and conform to business processes or the decision to resolve eCommerce channel conflict and you see the need for a single forcing authority – a chief officer.  You need a chief officer if you are trying to do things that are not natural in your organization.

Digital solutions rest on choice, collaboration and creativity that, while not natural, should become natural in your organization.  In the Digital Edge book, there are several examples where companies realized digital business outcomes through building cross-operational teams rather than concentrating authority in a single individual.

At Royal Caribbean the working relationship between the senior leaders led to an integrated solution rather than imposing a digital overlay onto the customer experience.

At the Children’s Hospital of Los Angeles, the organization brought together all of the clinical areas to create a comprehensive digital solution rather than trying to dictate it from the center.

Such collaboration reflects the reality of the digital solutions that rest on combination of digital and physical resources  to realize results and revenues.  After all the true nature of the solution will eventually work its way into your organization and that can obviate the need for the Czar, something that has happened in organizations that no longer have a Chief Process or Chief eCommerce officer.  Once you learn to work that way, you no longer need the dedicated executive focus.

Make an active decision rather than passively following the crowd

As a role there is nothing wrong with a Chief Digital Officer.  Likewise there is nothing inherently necessary in having one, particularly if your organization has worked hard at creating an executive team and organization that collaborates effectively across operational and functional lines.   If your leadership team collaborates effectively, is willing to make operational adjustments in their groups to support others, and routinely achieves its shared goals and objectives, then you may not need a CDO.

Creating the CDO role gives an organization focus by concentrating responsibility into a single executive position. The role can be a powerful catalyst that brings an organization together to create new digital capabilities. But it is not the only way to build a digital business, nor may it be the best way to sustain digital gains.  Just ask your chief process officer or eCommerce Czar and incorporate their advice into your decision. Make a decision because while others may want you to create a CDO, you are the only ones who have to live with or without this new role.

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Category: digital-edge  digitalization  leadership  

Tags: business-leadership  business-management  business-strategy  digital-edge  digitalization  strategy-and-planning  

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program.

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