Seven Critical Questions to Help You Determine Whether or Not Your Business Needs a Chief Digital Officer (CDO)

by | Sep 12, 2014 | Marketing Strategy

How would you react to the news that your primary competitor is hiring a Chief Digital Officer?

With a superior smirk? Perhaps so, if your forward-thinking company is among the 1,000 or so businesses that are projected to have a CDO by year’s end.

More likely, you’ll smile and nod and pretend that you’re taking a call, as you excuse yourself to the restroom where you can do some quick Googling. What is a Chief Digital Officer? What do they do? Does your company need one?

No matter the industry, nearly all business leaders will be familiar with what a CDO does in the next few years – either because they have one themselves, or because they are losing market share to a competitor who does.

Seriously, another C-level? (or) What’s in a CDO job description?

In simplest terms, the Chief Digital Officer is responsible for the strategy that connects your IT to your business and marketing plans, ensuring that your technology is being used to maximum effect to connect with customers and grow your business.

Depending on the type of business, the role of the CDO can take varying forms. In a company that is digital by definition, like Facebook, the role of Chief Digital Officer is likely filled by the CEO. All of Facebook’s strategy is, after all, digital.

In most companies that are not completely digital, the CDO serves as a visionary and advisor at all levels of strategic planning and operations, increasing comfort-level, innovating solutions and helping to grow business and avoid problems with digital communication and transactions. The CDO makes sure that efforts are coordinated and that funds are properly allocated to reach strategic goals at a pace that can be sustained by developing infrastructure.

The success of a CDO is defined by his or her ability to communicate vision and achieve buy-in at all levels of the company. Like any business leader, the best CDOs are those that are able not only to maximize today’s digital interactions, but are also able to anticipate tomorrow’s. Today’s CDO are reshaping yesterday’s businesses to maximize today’s opportunities and better position them for tomorrow’s success.

In time, the digital marketplace will become so common to all businesses that the role of a dedicated CDO may lessen. How many businesses today have specific telephone business plans? The CDO position evolved because many of today’s business executives don’t have a high comfort level with digital customer interaction and the online marketplace. All of tomorrow’s leaders will.

An effective CDO will help bridge the historically tumultuous gap between marketing and IT while innovating digital solutions and enhancing consumer’s digital experience at all business touch points. No matter what industry you are in, your customer base is more comfortable and is spending more time in digital environments than they were five years ago.  A CDO’s exact responsibilities change from one organization to the next, but the essential goal is always to enhance customer interactions and grow digital business.

What types of companies have CDOs?

Soon, every company that believes in the importance of the digital customer experience will have someone performing the duties of a Chief Digital Officer. Some of the biggest companies in the world are leading the way. Both McDonald’s and Starbucks have a CDO. So does CVS. So does Sears. The New York Stock Exchange has added a CDO in recent years. So have Harvard University, the Metropolitan Museum of Art and the City of New York, and the list goes on.

According to the estimates of the Chief Digital Officer Club, the world’s largest network of CDOs, the number of CDOs has doubled every year since 2005. By the end of 2014, that projects to 1,000 companies. CDO Club stats show that advertising agencies, publishers and media organizations have been early CDO adopters, while non-profits and government agencies are coming on strong.

Wait one flipping minute. Doesn’t IT do that? Or marketing?

One mistake that many companies make is to hand off digital strategy responsibility to IT. After all, they’ve always had the technology-related answers in the past. And to be fair, this can occasionally work. There are certainly visionary IT directors and Chief Information Officers out there who are capable of visionary leadership. In a recent survey of 2,000 CIOs conducted by Gartner and reported on in the Wall Street Journal, 20% reported that they were performing CDO duties for their company.

But it is important to note that the fundamental skill sets that make for a successful CIO and a successful CDO are quite different. A good CIO is focused on acquiring technology and keeping it running so your company can use it. A good CDO is focused on making your business customer-centric, and how business can be improved through public-facing technology. There is a lot of CIO in a good CDO and vice versa, but both roles are distinct enough to merit dedicated attention.

Similarly, there are some companies that have had success ascribing CDO responsibilities to their Chief Marketing Officer. There is some obvious logic here. Most CMOs come from a communications background, so they understand the value of enhancing customer experience, relationship-building, and brand awareness. Like the majority of CIOs, however, most CMOs are lacking some of the key ingredients for sustained CDO success. Few companies have marketing leaders who are comfortable enough with the tech environment to make best use of current tools while anticipating and preparing for those of the future. It is also unusual for a CMO to have the organizational buy-in to be able to dictate, or at minimum influence, operations beyond the marketing silo.

The ideal Chief Digital Officer is one-third CIO, one-third CMO, and one-third CEO, with equal proficiency and comfort all the way across that spectrum.

What is all this talk about digital business?

In the 2012 U.S. census, nearly 75% of all households reported having internet access in their home. And with more than 250 million smartphones now allowing unprecedented levels of interaction, smart businesses are leveraging those opportunities. In the age of the omnipresent internet, customers have come to expect an increasingly high level of digitization.

Not long ago, most businesses viewed digital opportunities solely through a marketing lens. In those days, a community college might advertise its classes online. Today, many are actually conducting classes in that digital space. A few years back, B2B customers were at the mercy of your sales team. Now, your ideal client is 75% of the way through the buying process before you even know they’re looking. In B2C, most customers who were shopping for furniture were content to visit a static web page, where they could see a few photos and verify your shop’s phone number and address prior to their visit. Today, they expect to be able to rotate an image of that easy chair 360 degrees while trying out various fabrics, colors, and patterns. If they like what they see, they expect to be able to order from their touchscreen. A few years ago, the web supplanted newspapers and phone calls as our preferred method for finding TV listings or movie theater showtimes. Now, with online streaming services increasingly winning favor, the web is no longer just a conduit to entertainment, it is a venue.

Today’s businesses aren’t just advertising online, they are selling in that electronic space, sharing news, research and content, conversing with existing and potential customers. A good digital strategy allows you to not only be ready and waiting when your customers come looking for you, it also allows you to engage them before they even know how much they need you.

As consumers turn to digital resources for information, communication, shopping, banking, news, play and entertainment, savvy businesses understand that their opportunities have grown far beyond enticing a potential customer to look at an ad or open the door to your shop. Today’s engagement opportunities are mobile, and social, and growing with each new innovation.

But here’s a little secret. Just as the division between “business” and “digital business” will be erased over time, so too will the other imaginary lines that once defined a company’s structure. In today’s increasingly transparent marketplace, the ways that you conduct your business and share your vision are a vital part of your company’s marketing, regardless of which department is in charge. While the potential range of digital business transactions has grown exponentially, marketing saturates every interaction. Everything you do makes an impression. And that’s marketing.

An effective digital strategy will identify and expand on your company’s online potential, drive product evolution and development and unite your traditional business with all of the individual digital consumer engagements to create a unified customer experience.

Does my company need a Chief Digital Officer?

Here are a handful of questions that will help you determine whether a Chief Digital Officer would be helpful to your business:

  1. Do you have a roadmap for converting offline solutions to digital, or to develop new and unique digital products and services for your customers?
  2. Do your customers engage with you online?
  3. Do your customers engage with your competitors online?
  4. Do you have a comprehensive digital strategy?
  5. Does your online presence allow for two-way communication with customers and potential customers?
  6. Does a Google search of your company name bring up information that is in line with how you want customers to view your company? How does that compare to what they see when they search your competitors?
  7. Is digital interaction central to your company’s growth and future success?

Now what?

If you are still reading, I’m going to assume that you are at least considering the merits of adding a CDO to your leadership team. Make no mistake about it, the digital marketplace has already changed the way that we all do business. Whether yours is a small business trying to carve out a niche or a huge corporation trying to take over an industry, an ever-increasing portion of your success will be attributable to what you do – or don’t do – in the digital arena.

Maybe your company already has a visionary leader who understands the ins and outs of strategic planning, e-commerce and business transactions, online marketing, social media, product transformation, relationship building, branding, and technology infrastructure capabilities. To be successful, a CDO must not only have the majority of these strengths, he or she must also have the organizational influence to be able to act on them.  Does your company have someone who fits that description? I hope so, because with every passing day, more and more of your competitors do.

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