The digital revolution is moving fast and spurring massive disruptions and transformations in industry after industry. A key sign of its growing importance is the rise of a new kind of executive: the chief digital officer, or CDO. Although the number of companies that have already hired CDOs remains small — just 6 percent globally, according to the results of our first annual study of the position — their ranks are clearly growing rapidly. In researching 1,500 of the world’s largest companies through company filings and records and publicly available information (see Appendix), we found that those in consumer-focused industries, including media, entertainment, food and beverage, and consumer products, are at the forefront of the trend. Large companies are also ahead of the curve, no doubt due to their sheer complexity and the greater effort involved in carrying out the necessary digital transformation. And European companies are hiring CDOs at faster rates than companies elsewhere.
The CDOs themselves, more than 40 percent of whom are members of the C-suite, come from a variety of backgrounds, but by far the most common is marketing and sales, followed by technology. This suggests just how differently the CDOs and the companies that hire them imagine the role, and how varied the digital needs and pace of transformation are from one company to another. Flexibility is perhaps the single most important success factor for executives new to the position. CDOs who can adapt to rapidly changing circumstances while staying tightly aligned with their companies’ business goals will be in the best position to lead the way to a full digital transformation.
The rise of digitization is bringing about a singular shift in how companies operate and the technologies they use to interact with customers, partners, and suppliers. Until recently, they struggled to take a truly integrated, synergistic approach to the relationship between technology and the business. Now, however, all kinds of technologies, from big data to social networking to advanced mobility, are coming together and driving the need for every company to prepare for the digital future. Says Bayer’s Federer: “Digitization has only become an option recently. And now it’s not an option anymore. It’s an imperative. We all have to do it.”
Yet CDOs have a difficult road in front of them. Often, they must negotiate entrenched company cultures, fight for ongoing support from top management, and balance the creation of new digital strategies with the inevitable operational issues involved in a full digital transformation, even as short-term financial goals consume the activities of many employees.
Success will require that CDOs on this new frontier be adaptable, focus on business goals and the organizational and cultural changes needed, and remember that once digitization is firmly entrenched in their companies’ everyday operations, they will have accomplished their mission. What’s in store for them afterward is as flexible and undefined as the roles they occupy today.
Strategy& researchers determined the global top 1,500 public and private companies by incorporating the Financial Times Global Top 500 companies by market cap and the top private and public companies based on revenues from OneSource/Avention. Market cap and revenue data was from 2013 and 2014. The researchers then studied the companies through corporate filings and records as well as other publicly available information, such as media coverage.
The study included 25 industries in Asia-Pacific, Europe, MENA, and North and Latin America.
In addition, Strategy& researchers conducted in-depth interviews by telephone in May and June 2015 with the following CDOs: Corinne Avelines, CDO at AkzoNobel’s paints division; Chris Curtin, CDO at Visa; Jessica Federer, head of digital development at Bayer; and Patrick Hoffstetter, CDO at Renault.