Chief digital officer: An insider's take – what CDOs do and why they matter
Many firms say they plan to hire a chief digital officer, with forecasts suggesting one in four businesses will have recruited one by the end of 2014. But right now a CDO in post remains a relative rarity.
David Mathison, founder of the Chief Digital Officer Club, recently told the MIT Sloan Management Review that there will still be only 500 CDOs worldwide by the end of the year, although that is a big rise from the 75 or so that existed in 2011.
However, one organisation that's already taken that hiring decision is medical and security services company International SOS, where Rich Gallagher took up the CDO reins in March.
He says the number of people doing his job is growing but perhaps surprisingly they're not necessary cropping up in more recently created companies.
According to Gallagher, CDOs are more common in conventional businesses that are in transformation, rather than in organisations formed in the current age, where a grasp of the business potential of digital products and services may be more ingrained.
For International SOS, appointing a CDO "was a way of introducing these digital concepts more widely across the organisation as opposed to having a recognition that they were already there inherently".
The company has existed for almost 30 years, providing medical and security assistance and training to the 10,000 travelling staff of client companies in countries worldwide.
"So [appointing a CDO] is a way of International SOS injecting that formally but a little less disruptively into their business. We have a very successful business and everything I do is about enhancing that — it's not about disrupting," Gallagher said.
Since many organisations are hiring a CDO to see their business through a period of change, he believes that the role may turn out to be a transitional phenomenon.
"How long it lasts in a separate organisational structure or a separate focus will really vary by business," Gallagher said.
"If you recognise that in most cases the CDO is in a business that's in a process of transformation, it implies there will likely be evolutions over time as this becomes assimilated into the basic character of the business.
"Because in most cases these individuals are introduced from outside the organisation and at a very senior level, that gathers attention. So it's a signal that this is important to our business and is part of the ongoing evolution."
Gallagher reports to the global head of products and works closely with the company's CIO — so International SOS is not one of the organisations where the CDO is usurping the head of IT, as recently predicted by analyst firm Gartner.
His background consists of more than 25 years in digital information businesses in technology, product and operations roles.
"Chief product officer, CDO, global head of digital products — so most of them equate to my current role and were product-oriented with overall product responsibilities, including technology," Gallagher said.
However, he sees organisations recruiting CDOs from a wide range of business backgrounds.
"It probably splits right down the middle. I see a lot of chief digital officers are from technology or what I call higher technology product roles," he said.
He has less experience of CDO candidates being drawn from "pure marketing roles although it makes sense as well that they could adapt".
"It really has to do with the ability to balance a number of different acumens, recognising that in digital products the lines are incredible blurred between the disciplines that go into them," Gallagher said.
"You're dealing with very tight cycles of product development processes, where the various disciplines that go into that product development are much more tightly fused. One has to be able to appreciate that a very tightly coupled iterative delivery process requires a more complex execution."
He said a deep knowledge of technology is important "because chief digital officers in many cases are there to show the business what's possible, not necessarily to respond to a discrete or specific market demand".
"To do that you need to have an idea of what's in the realm of possibility — technically or otherwise. Whereas a marketer might be less concerned with that and wouldn't let the facts get in the way of a perfectly good story," Gallagher said.
But equally the CDO's role is not about restricting a business's ideas about possible digital applications.
"It's less about seeing what's possible as a gating thing but it allows you to validate a direction for action. It shows you where you can go. Having an appreciation of what's possible allows you to set off successfully but it by no means defines an endgame," he said.
"I wouldn't see it as being parochial or too pragmatic. It's more about continuing to evaluate the potential opportunities and being able to act on them by having a dynamic delivery method."
Gallagher sees his role as helping International SOS evolve from traditional services and expand into new approaches involving digital delivery methods.
"I'm working to influence not just the pure digital products but also looking at opportunities to bring product and solutions together through digital methods," he said.
As an example, he cites the recent collaboration with mobile specialist InfoStretch on an app to provide travellers with urgent medical, transport and security assistance if they get into difficulties while overseas.
Gallagher said the mobile app, which will go to beta by the year's end, illustrates his broad remit to influence all parts of the business and "to look at and recognise what we're good at versus where we need to partner and do with other companies".
So as well as looking at a creating digital products and services, he also has to find ways of digitally enhancing or enabling existing offerings.
"We have a robust consultancy, and training products and services. E-learning, for example, is a point of collaboration where my unit and the training and e-learning unit are working closely together to create integrated digital learning," Gallagher said.
Despite the need for a common set of skills in digital products, higher technology delivery and product development, the thing about the CDO role is that it can vary from one organisation to another.
"The things we end up having to solve more or less on a daily basis can vary and it's more dependent on the condition under which we're trying to execute our work than necessarily the nature of the work itself," he said.
"It's a complicated position. I've heard if you Google chief digital officer, you'll find interesting articles such as why most chief digital officers fail in the first year. A lot has to do with the fact that most people don't completely comprehend what it is that CDOs do."
More on CIOs, CDOs and IT jobs
- Digital diaspora in the enterprise: Arrival of the CDO and CCO
- Facebook names first CMO: Will he have tech spend?
- The CIO 'can't be an order-taker'
- Digital marketing spend increasing, says Gartner
- CIOs may be usurped by CDOs and CTOs: Gartner
- Eventually, 90% of tech budgets will be outside IT departments