CIO or CDO: Who should drive your digital transformation?
Appointing a chief digital officer has become a rite of passage for companies looking to accelerate their digital transformation. But it doesn’t always go smoothly.
Target, for example, recently fired its CDO after just four months on the job, citing the need for better integration in digital efforts. It placed the responsibility for digital initiatives going forward with its CIO, who had a strong e-commerce background from his previous job at U.K. retail giant Tesco. Target felt the need to accelerate its digital efforts, as only 5 percent of its current sales come from online.
Target is not alone. Many retail chains struggle to develop effective e-commerce strategies because they clash with the existing organizational structure, which typically mirrors the processes necessary to distribute goods through physical retail outlets.
Yet not all companies align with Target’s decision to anoint the CIO as the responsible party for digital transformation. Noted digital analyst Brian Solis just published a study in which he found that CIOs were the locus of digital innovation in just 19 percent of the companies he surveyed. Solis found that chief marketing officers were the most common leaders of digital initiatives, followed by CEOs.
So who should lead your digital transformation initiative? Here are three rules to guide your decision.
1. Put one person in charge
Someone has to be responsible for the delivery of digital initiatives. I meet a lot of CDOs at conferences, and they talk a good game about mobile, multi-channel delivery and millennials. But it’s never exactly clear what they do. A company like Target (and I’m not picking on Target, but it’s a vivid example) can’t rely on exhortations from a visionary. It needs someone with the ability to create and deliver real services.
We're on the cusp of major change in how organizations interact with external parties. Companies need to identify an executive who is ultimately responsible for making that change occur. And that executive should not be your CEO, who almost certainly lacks the bandwidth to pull off a successful digital transformation project.
2. Enlist the entire company
The risk of putting a particular executive in charge of digital is that everyone else in the organization will conclude that digital is not their job. This is a problem because digital initiatives typically cut across organizational functions, including IT, product management, manufacturing, accounting and sales.
This is where the CEO can play an important role. He or she can make everyone in the organization accountable for delivering seamless customer experiences across all functions.
3. Insist on technical chops
Whether it's the CIO, CDO or CMO, the executive responsible for digital initiatives must have technical expertise. In my view, it's impossible to design a user-centric digital service unless the person at the top understands how digital services work at a technical level.
I say this because creating digital interactions is a highly technical process. Anyone who approaches it with the assumption that “there’s some magic that goes on under the hood” will have a hard time understanding how to redesign business processes by infusing them with IT.
Our economy is increasingly digitizing and automating manual processes, a trend the World Economic Forum describes as the Fourth Industrial Revolution. We are looking at a complete restructuring of how people work, play and trade. Leaders who fail to understand the capabilities and constraints of IT will be simultaneously underprepared and overly optimistic about what digital services can actually deliver.
Leading digital transformation: Lessons for leaders
- Your digital leader must deliver concrete, value-generating services. Vision takes you only so far.
- Cross-functional collaboration is critical to this role.
- Digital leaders need technical chops.