A CDO’s Five-Step Guide To Driving Digital Transformation

Digital transformation is a technology story, but it is also a story about leading change inside and outside a firm. This is where the CDO fits in.

“Digital Darwinism favors those companies that invest in change.” —Brian Solis, futurist at the Altimeter Group.

Digital transformation is a topic that continues to trend, particularly among established firms. The difficulty is that it raises many fundamental questions: What does it mean? How do we undertake it?

Conceptually, firms understand the need to evolve and the missed opportunities that technology is rapidly presenting. However, many lack the internal digital expertise and focused senior executive mandate to develop digital change. These forces are needed to develop the strategy and tactics to drive the change necessary to keep pace with digital’s opportunities.

Entwined in this discussion is the emergence of the chief digital officer (CDO), an evolving role brought in to orchestrate this change. A CDO bridges the gap between executives on the expense side, who often have large budgets and major line items to support, and executives on the other side of the income statement, who focus on key metrics, such as brand consideration and top-of-funnel lead generation.

In this regard, digital transformation is, indeed, a technology story, but it is also a story about leading change inside and outside a firm. This is where the CDO fits in. Thus, establishing a new CDO role at a firm, without acknowledgement of the need for change, isn’t enough. The two concepts should go hand in hand.

In this context are a number of important considerations for the individual entering a CDO role—particularly a newly created CDO role. Let’s take a look at the five critical success factors for the CDO who is focused on driving a digital transformation:

1. Ensure that senior executives are willing to change: The CDO shouldn’t be brought in simply to help the firm better execute the things they do today. Technology is ushering change at an increasingly rapid pace, and the CDO must partner with the firm’s senior executive team to drive more fundamental, cross-organization change. This horizontal partnership can only happen if there is broad commitment. In short, there must be a C-suite mandate.

2. Increase the frequency of experimentation: Experiments reduce risk and drive innovation. To encourage experimentation, many companies have launched innovation centers; these should be a blend of internal innovation, along with partnerships with startups, universities, and complementary firms.

To drive digital transformation, a CDO doesn’t need to focus solely on broad, sweeping changes; rather, an important focus in the early stages should be small, rapid changes, which is where experimentation thrives. In addition, establishing a structured innovation program gives a firm—and its CDO—an easy win to support the digital transformation program. That is, progress in driving innovation is something easy for the CDO to highlight.

3. Be nimble and agile: At its core, implementation of agile development is much more than just a software development methodology. Core concepts like cross-functional product teams—or, more colloquially, “scrum” teams—create a more holistic view of a desired business outcome.

This broader view is driven by the product team’s ability to bring more customer and internal considerations into the solution, and for small changes (and experiments) to be rapidly deployed.

4. Drive data to the edge: Digitization of businesses is driving an increasing amount of data that is available to a firm’s stakeholders. The CDO must shepherd investment in technology to push that data into the hands of as many users as possible—the “edge”—including pushing data to a firm’s customers and suppliers as a value-added service.

This type of approach has evolved from a “let’s try something different” way of thinking to an absolute necessity in competitive firms, and customers demand it be taken seriously.

5. Make data a discussion: A data strategy that focuses on producing static monthly dashboards has the wrong focus. Monthly dashboards can be a deliverable, but they are not the primary desired outcome.

Instead, the CDO must drive cross-functional discussions about data. Teams should get together regularly to review and discuss data, leading to open discussion about what’s happening in the business. Cross-functional product teams, in particular, will benefit from these discussions because they create a deeper understanding of a line of business across the team and, in turn, foster product innovation and more data-driven decision-making.

In addition, regular data discussions work to drive the team-oriented cultural change that is so fundamental to digital transformation.

As leaders embrace the pervasive role of digital in their firms, so-called digital transformations will become common. There will be continued growth in the number of CDOs to bring to bear the focus that is necessary for successful change.

Coupled together, a CDO-led digital transformation gives firms the best opportunity to create change, and perhaps most importantly, fosters a cultural shift that firms must have to keep pace in a fast-paced digital world.