The Chief Digital Officer (CDO) role is growing in popularity to facilitate the strategic business model implications of digital business transformation and make digital integral to strategy.
While bridging the innovation gap between the CIO and multiple lines of business, CDOs are a hybrid that can demonstrate digital, business, transformational and operational capabilities, with an outstanding ability to lead, communicate and engage people across the organisation. Not necessarily technical gurus, they are tech literate with an understanding of platforms, data, and audiences. They lead all-things digital and are comfortable engaging with business and technology peers on strategy, innovation, implementation, organisational change and business value.
While the number of CDOs is rising rapidly, according to PwC's first annual study of the CDO position, only 6% of organisations currently employ a CDO. Of these, more than 40% are members of the C-suite, and companies employing more than 10,000 people were found to be more likely to hire a CDO than smaller companies. CDOs were also found to be far more prevalent in Europe, than elsewhere in the world, as shown below.
“It’s the ability to lead transformation across an organisation that is the true indicator of likely success in the role, and that requires a combination of hard and soft skills.” – McKinsey 
While the role of the CDO has to fit well with the unique DNA of each organisation, after a 2015 CDO study, IDC identified three archetypes:
The Digital GM: Reports to the CEO and leads the establishment and/or transformation of a significant business.
The Digital Disruptor: Reports to the EVP or equivalent and leads a dynamic team charged with driving product and service innovation and cultural transformation.
The Digital Evangelist: Reports a level or two down but is highly visible to the executive level. Leads a small team designed to raise digital IQ throughout the organisation.
Do You Need a CDO?
Consider these five questions to help determine whether your firm needs a CDO:
- Is the marketplace where I compete undergoing—or vulnerable to—significant changes that are reshaping value?
- Is my company ready to move beyond basic digital experiments and embark on a fundamental and integrated transformation of the business?
- Is my company ready to signal its digital-transformation efforts to audiences both internal and external?
- Do we need a disruptive perspective from someone who can objectively and credibly challenge the status quo with a “digital first” mind-set?
- Does the current leadership team have the capacity to steward the digital transformation and support this new role?
In the same way that traditional technology leaders have needed a firm grasp on traditional technology tools such as ITIL, CMMI, TOGAF and COBIT, so the CDO will need their own firm grasp of the latest strategic digital business transformation tools such as the Digital Capability Framework and the Business Transformation Management Methodology.
As we move through 2016 with the digital decade ahead of us, it is clear that the rise of the CDO is testament to the fact that leading organisations are seriously intent on injecting healthy doses of innovation, digitisation and transformation into their DNA, to remain relevant in the years ahead.