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In the last two decades, digital technologies have transformed products, services, and entire business models, including the customer value proposition and the value creation processes. In many cases, new digital strategies have also made the transformation of business ecosystems necessary, creating a strong need for collaboration and coordination both within the company and with external constituencies. As a result, companies are exploring the roles and duties of digital executives, their attitudes and skills, and the key factors that lead to a successful digital transformation.
The executive most often leading the digital agenda is the chief digital officer. CDOs act as transformers in chief1 by propelling digital transformation, advocating the company’s digital efforts to internal and external stakeholders, and guiding management and staff through the change process. Scholars argue that this role must be filled by multiskilled leaders who can connect technology to the marketplace as well as the organizational business model and culture.2 Providing direction — vision and purpose for digital — is seen as crucial.3
To shed light on this important role, we collected and analyzed data from 211 digital leaders in manufacturing companies in Germany, Austria, and Switzerland, exploring successful CDO traits as well as conditions that lead to success. (See “About the Research.”) We explored questions including the following:
- How do CDOs serve as digital innovators and supporters of others who innovate?
- Who comprises their internal and external networks for digital transformation?
- Which skills and professional expertise do they draw on?
- What type of CDO is best suited to specific contexts?
Four Types of Effective Digital Executives in Business Organizations
We identified four types of effective CDOs who take distinct leadership roles and demonstrate different levels of success in different situations of digital transformation: Networker & Catalyzer, Insider Expert, Innovation Evangelist, and Lone Icebreaker. (See “Four Profiles of Successful Digital Executives.”)
Type 1: Networker & Catalyzer. The first type of successful CDO we identified was the Networker & Catalyzer. These CDOs have three major characteristics. First, they lead digital transformation by supporting the innovation of others and creating a work environment that fosters creativity. Second, they have a diverse network within the company: They can reach out to C-suite, middle management, and workforce alike.4 Around 70% of Networkers & Catalyzers also possess a large and diverse network of external contacts, such as customers, suppliers, or consultants. And third, they have strong people skills: They are honest and genuine, able to understand others’ behaviors and motives, and can influence and engage others.5
The Networker & Catalyzer contributes to digital transformation by helping individual innovators and project teams overcome internal barriers, advocating their ideas to other decision makers across the company, and securing resources for developing and implementing digitization initiatives. Rather than generating digital innovations, they help the company tap into the ideas of its workforce and managers and facilitate their implementation.
Type 2: Insider Expert. Similar to the Networker & Catalyzer, the Insider Expert possesses strong interpersonal skills as well as a large and diverse network inside the company. However, these CDOs also have developed very deep, strategic business and IT knowledge. Their high level of competence and expertise is reflected by the fact that more than 19% of executives within this category possess a PhD.
Compared to the three other types of digital executives, these CDOs have the longest average tenure with their company — 16 years (versus nine years for the Innovation Evangelist) — and have spent the least amount of time with other employers and in other industries. It comes as no surprise that their network lies primarily within the organization. The Insider Expert is what the American sociologist Alvin Gouldner described as a local — high on loyalty to the employing organization and likely to use an inner reference group orientation.6
Drawing on their recognized professional expertise, Insider Experts use their well-developed informal networks within the company and their strong interpersonal skills either to innovate or to advise and guide other innovators. Insider Experts can educate staff and management on the functionality and applications of cutting-edge digital technologies in the business context, reducing reservations stemming from a lack of knowledge and facilitating the adoption and diffusion of those technologies across the company.
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Type 3: Innovation Evangelist. In contrast to the Networker & Catalyzer and the Insider Expert, Innovation Evangelists propel digitization by their direct, personal involvement in innovation initiatives and projects. This type of CDO contributes to digital transformation by working as a gatekeeper — introducing new ideas from outside sources, challenging established perspectives and mental frames, and redefining the company’s vision and its underlying business logic.
Creative ideas often result from novel combinations of knowledge stemming from different fields of professional expertise.7 With about 58% of their career spent working with other companies and 47% of their career in other industries, the Innovation Evangelist is well-equipped for digital’s creative challenges.
The Innovation Evangelist lacks a strong technology background but possesses a deep knowledge of business and economics — 80% studied business administration and economics, the highest among all roles. These CDOs spend a much larger percentage of their career in finance or marketing and sales than the other three types.
Thanks to their excellent interpersonal skills, Innovation Evangelists enjoy a diverse network of supporters and idea providers outside of the company. With the largest external network among the CDO types, they best promote digital innovations by cross-fertilizing and recombining ideas, experiences, and solutions.
Type 4: Lone Icebreaker. Fully 72% of Lone Icebreakers have studied engineering and science. On average, they have spent 47% of their career within IT and infrastructure, 25% in R&D, and 22% in operations. In other words, CDOs of this type are geeks, bits and bytes executives with a very high level of expertise in digital technologies. Accordingly, Lone Icebreakers tend to be directly involved in important innovation projects and play a central role in major digitization initiatives.
However, Lone Icebreakers have fairly low levels of social awareness, interpersonal influence, and networking ability. While they have on average about 11 years of tenure within the company, their informal network within the company is underdeveloped (hence “lone”). This lack of internal support is a fundamental difference between them and Insider Experts and Networker & Catalyzers.
Lacking well-developed interpersonal skills, a Lone Icebreaker is likely to deploy other approaches to promote digital transformation. This CDO acts as a champion of innovation and the company’s creative engine. Icebreakers contribute to digital transformation by designing concrete, valuable solutions and heavily pushing others toward achieving goals.
Effectiveness in Different Contexts
We assumed that these four types of successful CDOs might be effective in different organizational contexts. To this end, we deployed two criteria: First, we considered the external pressure for digitization that a company — and consequently its digital executives — are currently experiencing. This indicator reflects to what degree the company’s market position is challenged by competitive digital offerings of the incumbents as well as new players in the market.
Second, we included the CDO’s decision-making authority — his or her level of influence and control over what happens in the company. Combining these two criteria, we developed a matrix comprising four different scenarios. (See “Effective Digital Executives in Different Work and External Contexts.”)
We found that the Networker & Catalyzer and the Insider Expert are effective across a number of different organizational contexts. The only situation likely to be unfavorable to Networker & Catalyzers is high pressure from external competitors plus a low level of strategic decision-making authority. In the three other environments shown in the figure, their key strengths — well-developed interpersonal skills, a strong internal network, and a diverse external network — enable them to deliver strong support to digital innovators and spur digital transformation.
Insider Experts do not need to have influence on the company’s core strategic decisions. Thanks to their valuable strategic business and IT knowledge, they can deliver a significant contribution to digital transformation in both high- and low-pressure situations. When the competitive pressure is high, they take more initiative, running their own innovation projects rather than simply advising and supporting others.
For the Innovation Evangelist and the Lone Icebreaker to be effective, they must have decision-making authority and participate in strategy formulation. These types drive digital innovation by being hands-on; they are personally involved in innovation projects, and set the pace and direction of the company’s digital transformation. To succeed, they need to be in high-level leadership positions with influence, control, and power.
There is a critical difference between these two types, however. Innovation Evangelists are effective in low-pressure situations. They develop and implement digital innovation as a part of anticipatory change, advocating creative ideas and introducing new thought frames into the organization. Lone Icebreakers, on the other hand, are successful under high external pressure, when the company feels a strong need to react. As a hands-on innovator with a high level of strategic business and IT knowledge, this CDO is likely to act as a hard-nosed crisis manager who presses ahead with digital transformation, disregarding employees’ feelings and fears.
Situational Fit, Not Superheroes
While the new digital executives are often portrayed as omnicompetent superheroes, we uncovered nuanced insights that shed light on this critical position.
Our data confirms that contingency, or a situational approach, remains valid for digital transformation. Leaders’ skills and actions play a crucial role depending on the circumstances, such as varying levels of competitive pressure.
Many roads lead to Rome — that is, to a successful digital transformation. We discovered four distinct profiles, or configurations of factors including skills, behaviors, and networks that enable high digital performance. Designating a jack-of-all-trades as a CDO is both unrealistic and ineffective.
It is important to keep in mind that some leadership approaches might bear risks in the long term. For instance, Lone Icebreakers might be effective as crisis managers during periods of high competitive pressure, but their poor interpersonal skills, their lack of engagement with others, and their limited internal network raises the question of how sustainable their contributions will be. The activities of digital executives as transformers in chief therefore should be brought into the broader context of change management studies for further practical guidelines.
We hope that our findings help companies discover what kind of CDO they need and also help CDOs advance digital transformation even more effectively. This and future research should help companies and their leaders deal successfully with one of today’s most powerful and exciting challenges — business digitization.
1. T. Rickards, K. Smaje, and V. Sohoni, “‘Transformer in Chief’: The New Chief Digital Officer,” McKinsey & Company, September 2015, www.mckinsey.com.
2. C. Galunic, “Digital Journeys: 10 Checkpoints in Building a Digital-Ready Company,” INSEAD case no. 418-0007-52018, INSEAD Case Publishing, Jan. 29, 2018, https://cases.insead.edu.
3. G.C. Kane, D. Palmer, A.N. Phillips, et al., “Coming of Age Digitally: Learning, Leadership, and Legacy,” MIT Sloan Management Review and Deloitte Insights, June 5, 2018, https://sloanreview.mit.edu.
4. These findings help shed more light on the results of other current studies. For instance, the 2018 Digital Business Global Executive Study from MIT Sloan Management Review and Deloitte revealed that among the key traits of effective digital leadership there are “creating conditions for the employees to experiment,” “empowering people to think differently,” and “getting people to collaborate across boundaries” (Kane et al., 2018).
5. To conceptualize and measure these interpersonal skills, we deployed the well-established construct of political skills (see, for instance, G.R. Ferris, D.C. Treadway, R.W. Kolodinsky, et al., “Development and Validation of the Political Skill Inventory,” Journal of Management 31, no. 1, (Feb. 1, 2005): 126-152.
6. A.W. Gouldner, A. “Cosmopolitans and Locals: Toward an Analysis of Latent Social Roles,” Administrative Science Quarterly 2, no. 3 (Dec. 1957): 281-306.
7. See, for instance, A. Hargadon, How Breakthroughs Happen: The Surprising Truth About How Companies Innovate (Boston: Harvard Business School Publishing, 2003).
8. P.C. Fiss, “Building Better Causal Theories: A Fuzzy Set Approach to Typologies in Organization Research,” Academy of Management Journal 54, no. 2 (Apr. 1, 2011): 393-420; C.C. Ragin, Redesigning Social Inquiry: Fuzzy Sets and Beyond (Chicago: University of Chicago Press, 2008).