Digitalisation is sweeping every area of modern life, and any business that fails to keep up with this trend will be left behind. Companies need to adapt and utilise digital technology in all areas. But whose responsibility is it to take charge of digital transformation?
Until recently, CDOs (Chief Digital Officers) were primed to take on this new challenge, but change is upon us yet again.
The digital transformation just won’t stand still.
The need for a CDO
Long gone are the days when digital technology was an outside-the-box innovation. It’s essential to how modern businesses are run. Those who don’t get on board are essentially sailing against the tide, while competitors sail off into the sunset.
That said, with so many different types of technology and areas of implementation, managing a digital transformation is no mean feat. That’s why, in recent years, the role of CDO became increasingly common among businesses.
In 2017, PwC found that 19% of companies have a CDO or equivalent, up from 6% in 2015. The numbers varied by country, with a digital leader at 62% of French companies, 39% and 35% in Germany and the UK respectively, and an average of 38% across Europe.
The problem with a CDO
Much like digital technology itself, modern business is dynamic. Already we’re seeing a new trend on the horizon, with CEOs (Chief Executive Officers) taking on the responsibility of the CDO. Why? In short, digital transformation is quickly becoming the top priority for businesses.
Typically, CDOs report to the CEO of a business, freeing up their time to focus on other aspects of the company. The CDO themselves don’t have the authority to commit resources – financial and staff – where it’s needed. Or at least not with the immediacy that’s required.
That’s exactly why firms are fast realising that the digital transformation is exactly where the CEO’s focus is needed. They have that authority, along with the position and ability to get the board on side. So, when firms are hiring a new CEO, they are typically looking for someone capable of taking on the CDO role themselves – rather than someone who will delegate such a crucial responsibility.
MIT’s Sloan Review found that a massive 41% of digitally mature companies – those who are closer to an ideally transformed organisation – put the responsibility of digital transformation with the CEO. Similar figures are true for digitally developing companies with 31%.
It’s only those early on in their digital transformation where things differ. Most commonly for these companies, it’s the IT department and CDO (23%) who take charge of digital technology. Clearly, there’s something to be said for the pattern on businesses shifting responsibility as the digital transformation moves further down the line.
Why the shift?
While an IT-centric approach is useful in the early stages of digital transformation, it isn’t the sole concern. In fact, as organisations mature digitally, the IT department typically has less control over the digitalisation process.
Why? Digital transformation isn’t just about technology. Far from it, people and process are just as, if not more important than the technology being used.
With a CDO focussed solely on technology and its applications, rather than the people and business more broadly, there’s only so far they can take the transformation. The result, in some cases, is a technology-led transformation with sophisticated technology that doesn’t meet the requirements or get the buy in it needs from the business to be a success.
CEOs on the other hand know all about a business. They know the culture, the workforce and the objectives both overall and in various departments. Or at least they should. If this can be combined with digital competence, effective management and the vision to apply the right digital tools where required, we can certainly expect to see more CEOs managing digital transformation moving forward.
If you want to find out how far along the digital transformation journey your company is, why not take our Digital Maturity Assessment?