The Top 10 Achievements of a Year-One CDOBy Guest Author | Posted 03-16-2017
The Top 10 Achievements of a Year-One CDO
By Abhinav Agrawal
In 2010, the chief digital officer population was scarce, consisting of only a handful of people. By the end of 2016, the number of CDOs had grown to more than 2,000 executives in a variety of industries.
From our research, we know that successful CDOs continue to make a positive impact on customers, employees and shareholders. Quick service restaurants provide a wealth of examples.
Dennis Maloney, CDO at Domino's Pizza, launched Domino’s AnyWare program, which allows customers to order pizza via text, tweet, smart TV, car, smart watch or voice (i.e., Amazon Echo). Following the program launch, Domino’s online sales grew from 15 percent in 2010 (when Maloney became CDO) to 50 percent of total sales in 2015.
Adam Brotman, CDO at Starbucks, launched a similarly successful program in 2014, when he debuted mobile order & pay in Portland and gradually expanded the program across all U.S. stores. By the end of 2015, the new mobile platform handled more than 20 percent of U.S. store transactions and approximately nine million mobile payments.
Of course, not every CDO has been that effective. We found that success depends on several common attributes, as well as the initial expectations set for a CDO’s first year in the role.
Attributes of a Winning CDO
Literature on the CDO role is typically filled with origin- and orientation-based considerations, such as insider vs. outsider and functional vs. technologist. But A.T. Kearney research on successful CDOs finds that such considerations are not a predictor of future success.
Starbucks has had great success with insider CDO Adam Brotman, who has been with the company since 1998. CVS relied on an outsider from Staples to set up the successful CVS Health Digital Innovation Lab. Linda Boff, a functional marketing veteran, was instrumental in GE’s digital growth. Meanwhile, Renault relied on Yahoo! technologist Patrick Hoffstetter to launch its Digital Factory.
From our research and experience working with CDOs, we find that successful CDOs share four common attributes, regardless of industry or geography:
Smart creative: Eric Schmidt, former-CEO of Google and executive chairman of Alphabet, introduced the concept of “smart creatives” in his book How Google Works. He says these individuals are data-driven, hands-on, collaborative and results-focused.
Technologist: The successful CDO must be a technology evangelist who has led at least one digital transformation and understands that having hands-on experience and a future-in understanding of technology trends are critical. This person should have strong connections with other technologists in startups, universities and research centers to keep pace with rapidly changing technologies.
Business savvy: This CDO has proven business acumen, preferably with experience running a P&L center. Because digital initiatives typically integrate business functions (marketing, supply chain, retail) with information technology and e-commerce, a successful CDO will be well-versed in all of these areas.
Leader and change agent: This CDO has proven leadership skills and demonstrated experience, such as building a team of smart creatives who “get things done” or setting the digital vision of an organization. As a change agent, this CDO influences peers and inspires the entire organization to follow the digital vision.
Expectations for a Stellar CDO During the First Year
Digital advancements are capable of propelling brands and reinventing industries, and the changes they bring about can happen as rapidly as one year. For these reasons, it is vital to provide the support necessary for a CDO to immediately be empowered and able to drive digital innovation and transformation.
Here are 10 critical achievements you should expect from your CDO during the first year:
1. Digital Vision
Develops a long-term digital vision for the company that supports and aligns with the overall business strategy. Your company’s transformation relies on this vision, so there is some urgency to establish it as quickly as possible. By working closely with C-suite peers, the CDO will quickly define the initial vision and then move forward with it, course-correcting as needed over time.
2. Gap Assessment
Assesses the organization’s current capabilities and identifies gaps that could block the vision’s successful implementation. This assessment will highlight gaps relating to resources, abilities, processes, products and other areas, and use them to accelerate, hold or cancel in-flight and future initiatives.
The Top 10 Achievements of a Year-One CDO
3. Digital Initiatives
Identifies a few initiatives that could measurably influence the organization’s ability to fill existing gaps. While any number of initiatives may be appropriate, research shows that organizations can only handle up to four initiatives at any one time, requiring prioritization.
4. Budget Building
Rather than using the more traditional annually adjusted budget, the CDO will set up a long-term budget that can be revised as frequently as monthly. Each budget revision should be based on reaching defined milestones so that there is a sense of urgency for achievements, allowing further projects to be financed.
5. Winning Team
Having a great vision, initiatives and ideas is not enough to produce desired results if one key ingredient of success is missing: a winning team. Without waiting for a multi-month hiring process, the CDO soon after coming on board will build a solid, innovative, creative team from existing employees and external partners.
6. Initiative Launch
The CDO will launch initiatives with the understanding that not all of them will succeed. Evidence shows that of four potential initiatives, typically one will fail outright, two may succeed moderately, and only one will be highly successful. Your CDO will test each initiative (with real that have promise, nurturing them until they can be delegated to a self-sustaining team.
7. Innovative Culture
As initiatives are launched, your CDO’s focus should shift from execution to building a culture of innovation, using methods such as design thinking and human-centered design, which consider the human perspective in all steps of solving problems. Building an innovative culture requires socializing the digital vision to everyone who has a stake in the outcome and gaining a grassroots commitment.
8. External Focus
Turns from an internal focus to an external one: contemplates rapidly changing trends within the industry and across the broader business community; collaborates with academics; and works with startups whose innovative efforts could change the company overnight. Without an external focus, the digital transformation effort will not succeed, and within two years, it could become the problem the CDO was hired to resolve.
9. Lessons Learned
Believes in data and evidence-based decision making. After giving free rein to the execution team for a few months, the CDO will analyze data from the limited production launch to learn and course correct. Failure is celebrated because it provides precedent for future initiatives and saves on wasted resources.
10. Start Again
Supports transparent communication, sharing the successes and failures of all initiatives with all stakeholders. This is key to achieving organizational alignment with the digital vision and in securing funding for the next round of projects.
Finding the right CDO—one who has the necessary skills, characteristics and experience to pull off a digital transformation—requires more than intuition or luck. The person you choose will need the right mix of personality traits and attributes, a year-one strategic playbook, and the good sense to get everything and everyone working together toward the same digital future.
Abhinav Agrawal is a principal in the Digital Transformation Practice at the global management consulting firm A.T. Kearney.