The Emergence of Chief Digital Officers

A new force is stepping into the C-suite — an upstart whose arrival signals how a company will manage social media and other digital technologies: the chief digital officer, or CDO. Appearing in many industries, CDOs share a similar mandate: provide oversight and strategy, and create a big-picture view of how social and digital technologies can make a difference to the entire organization.

One industry where CDOs are making headway is in higher education. The increased interest and activity in delivery of online classes and the rise of MOOCs (Massive Open Online Courses) are spurring administrators to take a deeper look at the role of social and other digital technologies in delivering educational content.

One newly appointed chief digital officer is Sree Sreenivasan at Columbia University. Sreenivasan, who was appointed to his position in July 2012 and reports to the Provost, told us that Columbia created his position to have a single person be responsible for cataloging, coordinating and shepherding what was going on in digital delivery of education, and to think about all of these changes from a broader strategic level. In 2011, Harvard also appointed a CDO, Perry Hewitt, who describes her mission at Harvard on her Web site as providing “comprehensive digital strategy to meet needs in communications, engagement, and transaction, as well as exploring ways that organizations transform through and for their digital constituencies.”

Like education, the media industry also has a deep and fundamental relationship with digital content. According to Tuck Rickards, who is a leader in the executive search firm Russell Reynolds’ Digital Transformation Practice, his firm first saw “strong signs of interest in the CDO role 18–24 months ago,” and it initally appeared in the media and retail industries. Now, Rickards says, CDOs are showing up in organizations in financial services, healthcare, manufacturing, and “to a greater or lesser extent, across all industries.” Rickards adds that the CDO trend seems to be impacting primarily Fortune 1000 firms.

Other very recent indicators of interest in the position include the recently sold out Chief Digital Officer Summit, held in New York City on February 28, 2013; a widely reported panel discussion at the recent 2013 Adobe Summit on the question of “who owns what” in the C-suite between the CIO and CMO; and the launch of a new Web-based discussion program called CxO talk, specifically focused on the topic of the changing relationship between marketing and IT.

But how does a company know if it really needs a CDO to shepherd its social media and other strategic digital initiatives? After all, says Vala Afshar, Chief Customer Officer and CMO at Enterasys, if your CIO is already involved in the business strategy side of the house, is collaborative, open minded, and works with a CEO that has a similar outlook, it may not be necessary to hire a CDO. But, he adds, in all cases, bringing in a CDO will “focus” the organization and will start initiating projects with a broader strategic direction of employing technology as the driver. Russell Reynolds’ Rickards also advises that a business needs to think about hiring a CDO “when your business is fundamentally challenged by digital, or when your competitors are making aggressive moves that could put you out of business and you are not equipped to respond.” But, he adds, at that point, “it is probably too late.”

Could the CDO role be a passing fad? Afshar acknowledges that in the past, there had been buzz about other emerging C-roles like chief Internet officer and chief e-commerce officer, and those never took hold. “But,” he adds, “in the past there was not this perfect storm of big data, social, and mobile penetrating the enterprise.” We now have “a complexity avalanche,” Afshar explains, and that “makes for frustrated users and customers that needs attention and has implications.”

There are already many large and prominent organizations that have created, hired and filled a CDO position. Some of the many organizations that have hired CDOs include: Gannett, NBC News, Forbes, Simon & Schuster, the City of New York, and Starbucks. A recent search on LinkedIn for people with the title “chief digital officer” returned over 700 names.

Where is all this headed? Says Afshar, “if the momentum of the CDO is sustainable, then that person may become the most powerful role in the company — it’s the person aligning the social strategy and the hottest business impacting areas.” (However, one might also wonder if in the even longer run, as digitization becomes embedded in everything a firm and its customers do, whether a CDO might seem unnecessary, kind of like a chief electricity officer. One major media firm, News Corporation, recently eliminated its CDO position apparently as a result of this kind of reasoning.)

But in the meantime, there is a push for someone to guide the technological currents that are spilling across disparate business units and functions. Afshar also believes that eventually it will not be optional, but required that social media be embedded and an integral part of a company’s CRM system. What he means is that when a customer contacts a business by email or phone, the service agent will need to be able to view that customer’s tweets, yammer, Facebook and the other social histories. And someone is going to need to see how social — and mobile and big data — get integrated into the workflow. This work transcends any individual line of business and will require a single-minded focus from someone with the authority to make it happen — and who, argues Afshar, must report directly to the CEO.

Afshar’s view that the CDO needs to report to the CEO echoes the conventional wisdom. However, in a recent blog post, Gartner analyst and group vice president Mark P. McDonald, who is co-author of The Social Organization with Anthony Bradley, makes the case that while it is true that the CDO often should report to the CEO, that may not always be the best reporting relationship for a CDO. McDonald argues that to whom a CDO reports depends on several factors: the specific role of a particular CDO (e.g., increasing revenue or creating policy), line vs. staff responsibility, and how information intensive a particular industry is. After inputting these factors, McDonald identifies a few sub-types of CDOs, and in some of those cases he makes the case why it would be best for the CDO to report directly not to the CEO, but to the CIO. McDonald created two charts to help companies identify what kind of CDO they need, and then where that person should best report.

Increasingly, companies are looking to a chief digital officer to be the person to coordinate and focus social and other digital initiatives enterprise-wide. But bringing a CDO into the C-suite requires hiring the right type of person and dealing with the changes in dynamics that new role will bring to the current members of the C-suite.

This is the final installment in my series of blog posts about how social business is changing dynamics on the C-suite. In prior blogs, we’ve noted that CMOs have become big beneficiaries of social business technologies and express the highest levels of optimism about their potential; CIOs say they have an interest in doing and learning more about social business but face several challenges; CFOs are the most skeptical, though this may be changing; and CEOs are showing more interest in social business, though their level of engagement depends on a number of factors.