The role of the Chief Digital Officer (CDO) is a hot topic — and a new report from the Apigee Institute identifies seven effective habits CDOs should have.
The report, “Three Keys to Successful Digital Transformation,” surveyed more than 300 executives in firms with at least a half billion dollars in annual revenue.
Three Keys, Seven Habits
The report claims “Every business must become a digital business" so it can “deliver digitally instrumented products or services, harvest data from market interactions and use insights to rapidly iterate and optimize their value chain” to gain competitive advantage.
Apigee claims the result of such a digital transformation is the ability to connect more closely with customers, accelerate innovation and gain insight from analytics.
The three keys to making the necessary transition to a digital business, the report states, are broadcasting a companywide commitment, establishing strong support for experimentation and appointing a leader who can help develop the seven following habits:
- “Mobilize companywide commitment
- Develop/evangelize a digital transformation mission statement
- Embrace data-based experimentation
- Connect with innovators and experts
- Manage digital transformation across departments and functions
- Speak multiple business languages
- Strive for tangible goals
Bryan Kirschner, head of the Apigee Institute, told CMSWire.com companies that use the term “digital transformation” are more likely to be mentally prepared for transitioning. Others may simply think they need tech upgrades or customer experience improvements.
Is a CDO Needed?
At companies Apigee rated as having above-average capabilities for deploying apps, operating APIs and using data analytics, 80 percent use the phrase “digital transformation.”
To accomplish this transformation, Kirschner said, someone “needs to be centrally responsible” for overseeing the transformation, for “helping to shift the company’s behavior” and for acting as the key driver or catalyst.
Once a company has achieved the desired state of digital awareness and the state of being digital is ingrained in the DNA and every facet of the firm, then “it’s possible” such a role could evaporate because it has served its purpose. The transition “might be ten years or it might be three years,” he noted, after which the CDO role could be eliminated or morph into being, say, the COO.
But there’s still a long way to go in most companies. Kirschner said a key challenge is “innovation fatigue or ”the sense of too much change." A CDO or similar role could help keep the pedal to the metal even in the face of such resistance.
So is the CDO role a C-suite position that helps a company shepherd in its digital transformation — and destined to lose its purpose in a few years?
Some digital transformation watchers are questioning whether organizations really need CDOs at all, including a new Forrester Research report, “The Chief Digital Officer: Fad or Future?” The research firm decided that some organizations already have internal leaders who can own the transformation, while others need to demonstrate the urgency and importance with the appointment of such a figure.
What’s a Digital Business?
Other reports and observers have noted CMOs and CIOs have such different agendas, experiences and priorities that if they are not able to synthesize their efforts, a CDO could provide the blended capability of both departments.
This Apigee report adds another, useful perspective on the evolving dialogue about CDOs. One quibble, though, is that, as a company focused on tools and platforms for apps, APIs and analytics, and with the Apigee Institute focusing on how companies adapt to the App Economy, the report noted that companies following the path toward digital transformation “have already built a strong advantage on key digital capabilities: deploying apps, operating APIs, and using data analytics.” The report also defines digital leaders as those with above-average capabilities in those three areas.
However, digital businesses can be defined more broadly than these building blocks, such as thinking in terms of networks of people, customer-centricity, digital marketing, social media and so on. Nevertheless, this report’s suggestions for needed attitudes by the organization and the CDO have merit across companies engaged in the transformation, even at those with a larger view of what digital business means.