Why do Chief Digital Officers Fail?

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Mar 10

The Chief Digital Officer (CDO) role emerged in the early 2000s as companies recognized the need for a dedicated executive to lead their digital transformation efforts. The role was created to help organizations navigate the changing digital landscape and effectively integrate technology into their overall business strategy. Unfortunately, there is no single definition for the role due to its dynamic nature and industry-specific variations. According to Deloitte’s The rise of the Chief Digital Officer whitepaper back in 2015, when the role started to really take off, there are three types of CDOs:

Ex-agency CDOs: Focus on digital marketing and customer engagement.
Digital Transformation Strategists: Lead organizational reinvention through digital innovation.
Technologists: Manage digital initiatives from an enterprise IT perspective, often reporting to the CIO.

According to PwC, in 2021 only 21% of the top 2,500 publicly traded firms had a CDO (46% in the insurance industry and only 5% in metals and mining). Yet, according to a 2021 NewVantage Partners survey 65% of data-intensive firms have a CDO in place, up from 12% in 2012. This data shows the importance and urgency that companies are placing on data and managing a digital strategy. Yet, at the same time, the process has been slow:

Only 48.5% are driving innovation with data
Only 41.2% are competing on analytics
Only 39.3% are managing data as a business asset
Only 30.0% have a well-articulated data strategy for their company
Only 29.2% are experiencing transformational business outcomes
Only 24.4% have forged a data culture
Only 24.0% have created a data-driven organization.

Why do so many CDOs fail?

Lack of role definition – Anytime a new type of role is created in the industry, everyone is bound to have a different interpretation of what it means. As this role is often designed to be disruptive, it is important to establish clear responsibilities, priorities, and boundaries.
Limited authority and resources – Without adequate resources and authority, CDOs may be unable to effectively execute their digital strategy and drive digital transformation within the organization.
Too high of expectations – Digital transformation initiatives are almost always massive changes for a company. CDOs often face resistance from employees who are resistant to change and unwilling to adapt to new technologies and ways of working.
Difficulty in managing organizational silos – CDOs can struggle to bridge the gap between different departments and break down silos that prevent collaboration and information sharing.
Limited Executive acceptance – Whenever you create a new role for the first time, you’re ultimately taking away an area of responsibility of someone else, usually the Chief Information Officer (CIO) in this case. Is this new position welcomed or feared by other executives?