One analyst reports that by 2015 25% of companies will have a Chief Digital Officer (CDO) who resides outside of the IT department and is responsible for driving the digitization of research and development, marketing, customer service and the creation of new products and services.
Before you create this new role and contact your favorite executive recruiters, take a step back and ask a few questions:
- What is the scope of digital transformation for your company? Does it include customers? Products? Employees?
- Does someone have responsibility for some or all of this work today, but it’s not getting done?
- Where should this work exist within the organization?
- What skills are needed in the leaders and team?
I don’t have a problem with placing an executive in charge of digital transformation, if that’s what a company needs to advance its goals. I don’t even mind if the executive selected is someone other than the CIO. Based on past experience, however, I foresee significant issues with placing the CDO outside of the IT department.
We’ve been here before. Back in the 90s, companies established heads of e-Commerce and created separate e-Commerce teams to handle the digitization of the buying and selling transactions. Unfortunately, these separate teams resulted in confusion, redundancy and resentment as these teams re-created much of what the IT function had established over many years prior. Plenty of time and money were lost before the e-Commerce functions were rationalized back into the product, sales and IT functions where they belonged.
History is on the brink of repeating itself. Digital transformation is the next wave of e-Commerce. The first phase was about selling to customers. Digital transformation is deepening connections with customers. We didn’t need a separate reporting structure then and we don’t need one now.
I think of the collection of market-facing, customer-oriented technology issues as simply another business domain, like supply chain, finance or human capital management. Yes, it’s a new and rapidly changing marketplace, but it’s also one centered squarely on advances in information technology.
I see a few organizational approaches that could work within the existing enterprise superstructure, leveraging the existing digital conversations. These alternatives depend on the skills resident in current IT leaders.
- Rename the CIO role as Chief Digital Officer to emphasize the market facing focus for IT in your organization. Keep the back office technology structures in tact.
- Group the market-facing teams into a single unit under a CDO, in IT reporting to the CIO. Many IT functions have a leadership role responsible for app solutions (eg, VP – Application Development). This could be split into two – one market-facing under the CDO and one under a leader for back office solutions.
- Organize all business solutions under the CDO and all back office and infrastructure under the CTO.
- Orient market-facing technology responsibility with an existing CTO, who has strategic planning and management skills.
To bring in fresh, outside-in perspectives, consider strategic assignments from marketing, sales, customer service and product functions or a few external hires into a team based on one of the models above.
If you list all of the responsibilities for a new CDO role, I think you will see that much of it already exists somewhere in your organization. Don’t confuse the need for new skills and renewed focus with the need for an entirely new, and separate, technology organization. Executives might go fast without the IT organization, but they won’t get very far.
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