Many companies already have him - the CDO. He supports the digital transformation and organizations rely on him to bring the necessary change to the them. According to a study by the University of Applied Sciences Berlin, 40% of DAX companies already have a CDO or at least a comparable role. We already briefly addressed the idea of the CDO in our articles “Do Companies Need More CxOs in the IT Environment” and “Success Factors of Digital Transformation”. Due to the increasing number of CDOs, we want to take a closer look at its role in the first part of this article. The second part, in which we show possible alternatives to the CDO, will follow shortly.
The role of the CDO
Today, companies are facing the challenge of mastering the digital transformation. This involves a process of change in which existing business models and procedures are questioned and optimized by digital technologies. To meet this challenge, more and more companies employ CDOs. For a successful implementation of digital transformation, CDOs have to formulate and implement a digitalization strategy.
In this regard, it is important to digitalize the internal processes of a company, to implement IT initiatives and to keep an overview of current technological developments. Particularly in their own corporate sector, CDOs need to know about IT innovations. They have to be able to identify potential opportunities and new business models in order to realize competitive advantages. For example, with digital transformation, businesses can increase efficiency and performance at a lower cost, develop more focused business models for specific customer needs, and respond more quickly to market changes.
As a result, CDOs drive change across the organization, which goes beyond departmental boundaries. In order to enforce digitalization within the various strategic business units, CDOs need the appropriate decision-making power. Organizationally, CDOs are therefore located in the management level and report to the CEO. However, decision-making power alone is not enough. CDOs must also have the power of persuasion and help employees understand the need and benefits of digital transformation.
CDOs are considered as temporary because their task is done after the successful implementation of the digital transformation. Due to increasing digitalization, it will not be sufficient in the long term if only one person thinks digitally. Instead, in the future, all executives should think digitally and recognize opportunities that arise through IT.
The implementation of digital transformation by CDOs is influenced by various success factors. In reality, CDOs often struggle with various issues that slow down the implementation of a successful digital transformation. These include the following examples.
In order to successfully advance the digital transformation, CDOs need the necessary power of decision, freedom and authority. If these are lacking, this will affect the assertiveness of the CDOs and, ultimately, the implementation of the digital transformation.
Also, CDOs are not able to implement the digital transformation alone. For this they need the support of other executives. However, conflicts can arise when leaders fail to grasp the need for change in their own area and find CDOs a disruptive factor interfering with their responsibilities. So if the CDOs lack acceptance in the company, they can only do little.
Furthermore, focusing on efficiency can become an obstacle if one considers necessary investments as mere cost factors and does not realize the benefits that result from them. So CDOs also need a budget that they can use and invest in the digital transformation.
So for CDOs to be successful, they not only need the right skills, but also an environment that supports the implementation of digital transformation.
Now that we have considered the role of the CDO and its success factors, we want to show in the second part which alternatives besides the CDO are conceivable and which conclusions result from them.