Chief Digital Officers and Transformation

By Christopher Rollyson

Chief digital officers and transformation will go hand in hand as the position and its competencies take shape over the next few years. Historically, commercial, government and nonprofit enterprises, when faced with profound business change or technology disruption, respond by elevating new types of leader to the “C” level. Chief Knowledge Officer, Chief Process Officer, Chief Ecommerce Officer and the like become de rigeur for a few years and fade, either because the new disruption proved less sustainable than anticipated or because the competency became subsumed by a more core function.

I predict that the Chief Digital Officer (CDO) will play a vital role at most organizations through 2020, but the organizational role will be fleeting as a standalone. “Digital” will integrate all functions and be the standard eventually, but organizations require intense transformation to get there, so the CDO will play a crucial role. My ongoing analysis of social business adoption indicates that the market for social business transformation will hit an inflection point by 2017, as more advisors and executives see the power and results of digital communications and collaboration.

The Chief Digital Officer is a powerful locus of attention, but current thought leadership reveals a lack of clarity about “digital” and the CDO role; moreover it unknowingly discounts the transformational potential of social business, both of which I’ll address here.

The Gartner Chief Digital Officer Model

Gartner’s Mark McDonald proposed four “types” of CDOs as defined by revenue accountability and organization. He made the excellent point that the “digitization” process will vary with the type of organization, how it currently uses digital technologies and what kind of business it is/how it generates revenue. Here I’ll touch on Mark’s model for four types of CDO before suggesting how each can best use social business for organizational transformation. The “often used by” parts are my interpretation. I encourage you to read Mark’s post.

The Chief Digital Revenue (Sales, Ecommerce) Officer

Focus: driving new and incremental sales/ecommerce revenue from digital technologies; runs the digital part of a business/brand with revenue accountability.
Often used by: organizations that have significant digital operations that they want to expand in depth, breadth or both.

The Chief Digital Champion Officer

Focus: disrupting a business/brand from the inside, using digital technologies, processes and programs to create new capabilities, often within a new digital unit.
Often used by: any business/brand that wants to disrupt itself from the inside.

Chief Digital Marketing Officer

Focus: driving new and incremental marketing/promotional revenue through other business units; uses digital technologies to create new customer experience, and has revenue accountability.
Often used by: organizations that have significant digital marketing operations that they want to expand in depth, breadth or both.

Chief Digital Strategy Officer

Focus: disrupting the enterprise from the inside, using digital technologies, processes and programs to create new capabilities.
Often used by: enterprises that want to disrupt themselves from the inside.

Social Business Transformation of the Enterprise

There is broad consensus that “digital” encompasses four competencies: mobile, social, ecommerce and big data/analytics. Of course, the relative importance of each competency will vary with type of organization and the business it’s in, but I’ll argue that social, since it digitizes communication and collaboration, is the most broadly transformational competency. All organizations depend on communication and collaboration to create value, and digital social has shrunk the cost of both by an order of magnitude. Few organizations have discovered how to reorganize to unleash the power of much faster, cheaper communication and collaboration, which has kept social off the radar so far.

Since very few analysts, consultants and executives have seen digital social transformation from the inside as I have, thought leadership underweights social. Of course, by “social,” most authors assume “social media,” which is far less transformational than social business; social media simply uses social technologies as a new channel for content distribution, promotion and marketing. That is evolutionary, not revolutionary.

By prioritizing transformation and disruption, we can shrink Gartner’s four types of Chief Digital Officer to two, and I’ll propose that their differences won’t often matter in practice.

From Four Chief Digital Officer Types to Two—Then to One

By prioritizing transformation and disruption, we can shrink Gartner’s four types of Chief Digital Officer to two, and I’ll propose that their differences won’t often matter in practice. I’m not saying that the others don’t matter—all will create intense value for various organizations—only that transformation makes two of the four most relevant.

Of the four digital competencies, ecommerce, mobile and analytics are already part of digital operations at many companies, so many CDOs will be necessarily focused on evolving, scaling and managing digital operations. Their charters will be repositioning digital within the organization, making it more strategic and powerful relative to other capabilities. Any of these three competencies can drive profound transformation of organizations, depending on their business and current use of the competencies.

However, the “social” competency, since it refers to social media, addresses transformation superficially at best. Organizations aren’t even in the social business transformation ball park.

Moreover, social business, since its transformation journey involves discovering, engaging and scaling new relationships with customers, clients, partners, employees and other stakeholders, requires a significant learning curve. Its value is grounded in relating to stakeholders in new ways, not technology skills like big data or analytics. Social has the most profound disruptive potential of the four digital competencies when it is approached as social business.

Each situation is different, but generally, we can shrink the four types of CDO into two:

CDO Type One: Evolving Digital Operations

This CDO adds clarity and scale to existing ecommerce, mobile and analytics operations, whether marketing-oriented or sales-oriented—at the enterprise or business/brand level. This type corresponds to Gartner’s Chief Digital Revenue Officer and Chief Digital Marketing Officer.

Depending on the business and its experience with digital prior to hiring a CDO, any of the four can be pivotal. Social business can be profoundly transformational in any business.

Ecommerce: CDO focuses on integrating social and mobile, mcommerce and analytics to grow the ecommerce/mcommerce business. Growing digital will be pivotal to enterprises whose non-digital businesses are shrinking.
Mobile: can revolutionize sales, service and even product/service development, depending on the business. Discover, experiment and scale how to engage smartphone-enabled stakeholders.
Big Data/Analytics: most organizations have been collecting digital data for decades, but new technologies are enabling them to knit data together and derive new insights into demographics and individuals. The first level of value is often creating and delivering more “personalized” marketing and sales messages.
Social: can be approached as social media, as it is currently at most organizations, or social business. Many brands already have significant social media operations. The Upgrade Social Media use case details how to mature social media into transformational social business. The Herd the Cats use case shows how to improve business returns of several business units or brands.

CDO Type Two: Transforming the Enterprise with Digital Social Business

This CDO has an explicit transformation/disruption focus at the enterprise or business/brand level. It corresponds to Gartner’s Chief Digital Champion Officer and Chief Digital Strategy Officer.

Gartner’s model specifies that these types “transform” the organization. Reading into the context, I’ll hazard that each of these CDOs uses social technologies to transform passive, isolated relationships with stakeholders (customers/clients/users, partners, regulators, employees, communities…) to active collaborative relationships.
As I proposed in the Transform the Enterprise use case, explicit social business transformation operationalizes through a Social Business Competency Team under the CDO that builds social business competencies iteratively and spreads them throughout the enterprise via mentoring. Therefore, whether the CDO is housed at the enterprise level or within a business unit matters little.
Any organization that explicitly approaches social business as transformation will not keep it within any business or brand because it is so fungible.
Using the SBCT and transformation approach enables organizations to begin transformation anywhere and achieve enterprise transformation as a function of conditions and results. They should begin social business transformation in the optimal part of the organization, where stakeholder adoption is highest and organizational resistance is lowest.

“Social” Will Require Intense Focus to Achieve Best Results

My experience advising global businesses on social business strategy and execution consistently shows that, when organizations use a relationship-focused approach, they create new opportunities to reinvent themselves from the ground up. When they learn to use social technologies to discover, create and scale trusted relationships with stakeholders, collaboration and innovation increase sharply. These drive profit.

Therefore, it follows that It will be more difficult for CDOs to transform businesses or enterprises with social business when they have significant operations management accountabilities. Transforming with social is complex and not a part-time job because it is often disruptive, and the CDO will need to orchestrate transformation so s/he creates new profit without negatively impacting legacy revenues in the meantime.

It will be more difficult for CDOs to transform businesses or enterprises with social business when they have significant operations management accountabilities. Transforming with social is complex and not a part-time job.

Social Business Transformation for Chief Digital Officers

Here are general recommendations for how each type of CDO can use social business for transformation. All refer to the Social Business Life Cycle.