Editor’s note: The following is a guest post by Andy MacMillan, CEO of UserTesting.
What do retailers Chico’s FAS, Fossil Group, and Sephora have in common? All are among the chains that have created a new C-suite position in the last two years: the chief digital officer (CDO).
Though the CDO title first emerged in the early 2010s as more companies decided they needed a dedicated senior executive to lead their digital transformation strategy, the role is still relatively new. Eight in 10 CDOs are the first to hold the job in their company, and 65% have been in the position for three years or less, according to Capgemini data.
Retailers in particular have been on a CDO hiring spree as they adapt to sweeping changes, such as the online shopping boom accelerated by the pandemic and the blending of digital experiences with physical ones to optimize customer experience.
Examples of retailers’ growing focus on the intersection of physical and digital are everywhere, from virtual fitting rooms that use augmented reality to merge the in-store and at-home experiences to the new Nike Live stores that evaluate customer data from Nike’s digital touchpoints to heavily personalize in-store inventories.
At first blush, the appointment of a CDO seems as simple as choosing someone with the right strategic sense and leadership skills for the job and then setting them loose on shaping the company’s digital growth blueprint.
However, the reality often proves more complicated.
Consultants Thomas Davenport, Randy Bean and Josh King, writing in the Harvard Business Review, say “the CDO role can be a tenuous one.” The main reason? “The job is often poorly defined,” they write. “Many organizations expect too much of their CDOs and have unclear priorities for them.”
Most CEOs understand that the CDO role has fundamentally changed in recent years. While the job was once technology-centric, it’s now about how to best use technology to solve critical business problems and meet customers where they are in the hyper-digital world.
Today’s CDO works at the intersection of technology and business, as much a strategic thinker, brand steward, marketer and product visionary as a techie.
To illustrate how many organizations now consider the job more of a business charter than a technical one, a recent CDO search posting by the Gap said the retailer wanted someone who can lead teams “to be customer-focused, innovative, fast and results-oriented. The leader is critical in driving a culture of continuous innovation and seen as a driver and inspiration for digital innovation.”
That’s a good example of how CEOs should be thinking about the role to ensure the CDO’s success and longevity. Here are three more suggestions on how leaders should view the CDO role.
1. Have a clear view of where the company is — and where it wants to go
Before bringing in a CDO to tackle its digital transformation mission, a company first must have – and be able to communicate to the CDO – a true understanding of what exactly that mission is.
Questions the CEO must ask include: Are we going for a digital strategy that is transformational or additive? Do we as a retailer want to keep leveraging our physical locations or move away from them? Is our goal to shift revenue from one channel to the other or grow overall?
The answers are likely to be different for different companies, but a CEO must know what they are so the CDO can hit the ground running in creating the precise business value that matters most to the organization.
2. Carefully decide what kind of person best fits the mission.
CDOs tend to fit one of four archetypes, according to a Deloitte report,
“The disrupter” is devoted to upending existing business models and making bold changes. “The innovative integrator” blends customer insights with operational capability improvements. “The market-minded maven” drives new digital solutions for customer-facing channels and routes to market. “The technology integrator” is technology-centric and uses digital innovation to accelerate change in the organization.
Of course, some CDOs may have a combination of these disciplines. But, bottom line, a CEO needs to understand how the digital officer’s distinctive strengths and experience jibe with what the company wants to accomplish.
3. Set high expectations for collaboration.
The chief digital officer must be adept at working with stakeholders across the organization to enhance customer experience.
Heavily collaboration across teams, regardless of whether they involve traditional or newer digital models, is crucial as the new model, which aims to bring the best parts of the digital experience into the physical arena and vice versa, continues to take hold.
In this approach, neither channel is more important than the other — they both matter — so teams within an organization must recognize that they need to collaborate to grow the overall revenue pie. CEOs need inspirational CDOs who understand that and can inspire others.
Again, consider the Gap job post, which said the company wants a CDO who will partner with product management, strategy and brand leaders to “act as a trusted thought leader with brand and function leadership to inform and influence business strategies” and create “ongoing opportunities to inspire new thinking.”
If executives are able to answer these three questions, they will closely connect the CDO role to important business objectives and outcomes and thus advance the company’s critical digital ambitions.
