How Chief Digital Officers Promote the Digital Transformation

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How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 How Chief Digital Officers Promote the Digital Transformation of their Companies Chief Digital Officers (CDOs) are establishing themselves as new executives at the top management level of companies that go through a digital transformation. To help managers understand how CDOs can be successfully installed and why CDOs have been established in the first place, we present six case studies of CDOs and describe how they fulfill their positions. Based on these cases, we derive two main factors that drive the employment of CDOs: high market pressures to digitally transform and the complexity of coordinating digital transformation activities across the company. We also identify three role types that CDOs primarily exhibit (the Entrepreneur, the Digital Evangelist and the Coordinator) and five types of skills and competencies CDOs should have. Page 1/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Agenda Ø The Emergence of Chief Digital Officers Ø Six Cases Illustrating the CDO Role Ø The Three Role Types Ø Key CDO Skills and Competencies Ø Lessons Learned Page 2/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 The Emergence of Chief Digital Officers Ø Companies struggle to embrace new opportunities presented by new digital technologies Ø 63% of executives find “the pace of technology change in their organization is too slow” Ø Until recently chief information officers (CIOs) were held responsible for digital transformation Ø CIOs expected to move from pure technologists to business strategists Ø New responsibilities placing pressures on CIOs Ø CIOs have difficulty embracing the new responsibilities Page 3/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 The Emergence of Chief Digital Officers Ø Digital transformation Ø Using new technologies: social media, mobile access, analytics, or embedded devices Ø Involves company-wide digital transformation strategy which addresses company opportunities and risks that originate from digital technologies Ø Responsibilities associated with digital transformation have high level of complexity Ø Too intense for just one senior executive to manage Ø Companies establishing new position at top management Ø Chief Digital Officer (CDO) Ø Employed to make digital transformation a strategic priority in their company Ø First CDO was at MTV Networks in 2005 Ø CDOs forecasted to reach 2, 000 worldwide by 2015 Ø One of fastest-growing C-level positions Page 4/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 What is a Chief Digital Officer? Ø CDO Role – to orchestrate the digital transformation of a company Ø Supports top management in formulating and executing a dedicated digital transformation strategy Ø Aims to bring company to forefront of the digital evolution taking place Ø Have wider role than heads of individual digital business units Ø Fosters cross-functional collaboration Page 5/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Comparison of CDO and Other Cx. O Positions Digital mobilization of whole company Initiation of digital initiatives Company-wide collaboration Chief Data Officer Strategic IT deployment IT support Strategic Perspective Chief Information Officer Digital Transformation Strategy IT Strategy Specialist Role Key Responsibilities Chief Digital Officer Digital Transformer of the Company Strategic IT Specialist Chief Innovation Officer Data management Data analytics Structured corporate innovation No specific focus on the digital sphere Chief Strategy Officer Management of strategy process Strategy execution Data Strategy Innovation Strategy Corporate Strategy Data Specialist Corporate Innovation Specialist Corporate Strategist Page 6/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Six Cases Illustrating the CDO Role Ø Six companies that employ a CDO are used to illustrate how CDOs perform their roles in a range of industries Ø Industries: Retail, tourism, education, market research, financial services, and publishing Ø Each case identifies the: Ø Scope of the digital transformation Ø Reason for creating the CDO role Ø Positioning of the CIO and CDO Ø CDO tasks Ø Cooperation with CIO Page 8/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Overview of Six Case Organizations Case Industry Revenues Employees [in €] per Year Positioning of the CDO Most Senior IT Executive 1 Retail 20 -30 bn. 60 -70 K Group-level Chief Information Officer 2 Tourism 1 -5 bn. 1 -5 K Subsidiary-level Chief Information Officer 3 Education 500 mn-1 bn 1 -5 K Subsidiary-level Chief Technology Officer 4 Market Research 100 -250 mn 500 -1, 000 Subsidiary-level Chief Technology Officer 5 Financial Services 100 -250 mn 500 -1, 000 Subsidiary-level Head of IT 6 Publishing 1 -100 mn 100 -500 Group-level CDO* Page 9/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Overview of Case Study Findings Focus of Digital Transformation Task Focus of CDO Relationship Between CDO and Most Senior IT Executive Case 1: Retail Case 2: Tourism Enhancing customer experience Digital innovation Growing the online and mobile business Integration of online and traditional business Close collaboration and iterative requirements definition: CDO takes business perspective CIO takes IT perspective Close collaboration: CDO takes charge of strategy CIO takes charge of IT impleme ntation Case 3: Education Case 4: Case 5: Case 6: Market Financial Publishing Research Services Introducing Optimizing Enhancing Fostering esophisticated ecustomer service business learning courses solutions Development of Support of Introduction of Increase of digital business market managers digital tools and digital model and digital devices revenues products CDO Close CDO delegates collaboration: assumes technical CDO takes CDO focuses both roles aspects to customer on the CTO at perspective communicagroup level CIO delivers tional tasks CDO has correspond- CIO takes on additional ing IT technology software perspective developers Page 10/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Three Role Types of CDOs Entrepreneur Role • Explore IT-enables innovations • Initiate and design the shift of company to becoming digitally empowered Digital Evangelist Role • Convince the workforce across all departments and hierarchy to pull together • Communicate digital strategies across company and departmental boundaries Coordinator Role • Stimulate immense changes necessary to execute companies’ digital strategy • Coordinate different functional business areas to achieve alignment Page 12/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Primary CDO Role Type by Case Company Entrepreneur Case 1 (Retail) Case 3 (Education) Digital Evangelist Coordinator Case 4 (Market Case 2 (Tourism) Research) Case 6 Case 5 (Financial (Publishing) Services) Page 13/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Key CDO Skills and Competencies IT Competency Understand IT applications and underlying infrastructures and knowledge on how they can be upgraded and modified Change Posses business acumen including specific know-how on Management Skills strategy, transformation and change management Inspiring Skills Convince internal decision makers and employees of the need to digitally transform and demonstrate the benefits that will come from the transformation Use visionary thinking to look past existing strategies and Digital Pioneering previous procedures and envision he digital future of Skills company Resilience Be resilient to complete the digital transformation journey which will require substantial changes to the company Page 15/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Most Important Skills and Competencies by CDO Role Type Entrepreneur Digital Evangelist Coordinator Digital Pioneering Skills Inspiring Skills Digital Pioneering Skills Resilience Change Management Skills IT Competency Page 16/17

How Chief Digital Officers Promote the Digital Transformation of their Companies Singh and Hess – March 2017 Lessons learned Ø Lesson 1: Top Management Should Ensure CDOs Have Sufficient Authority Ø Lesson 2: CDOs Should Hone the Skills Required for their Primary CDO Role(s) and Address the Challenges Caused by Internal Resistance Ø Lesson 3: Appointment of a CDO Offers Opportunities for the CIO Ø Lesson 4: CDO Positions May Be a Temporary Phenomenon Page 18/17