Why Every CEO Needs a Digital Transformation Officer

February 24, 2020 · Paolo Timoni
Photo by Mike C. Valdivia on Unsplash
Photo by Mike C. Valdivia on Unsplash

To successfully execute a digital transformation program at greater speed and with less organizational pain, CEOs and top management teams should partner with an interim digital transformation officer that will lead the design and implementation of a time-boxed program ensuring alignment with the company strategy and accountability for the resulting value creation.

Digital transformation is a challenging organizational effort

Digital transformation programs are very difficult to execute even for very strong and experienced executive teams (Harvard Business Review, Why so many high-profile digital transformations fails). A digital transformation program focused on accelerating organic revenue growth will typically encounter four major challenges:

  1. Unclear market opportunity: closing a digital capability gap is nowadays an important priority for most companies. However, failing to connect such effort to a real market opportunity will produce an ROI that is insufficient to sustain such effort in time. Often, the best results are achieved when focusing on a specific part of the business that, although smaller in size, has a real opportunity for future growth.
  2. Insufficient senior leadership time: implementing new business processes and enhancing customers' value proposition leveraging new digital technologies is a cross-functional effort requiring experimentation and organizational change, and the rapid resolution of many difficult trade-offs. Given the initial limited impact on the bottom line, senior leaders with important line responsabilities typically are not able to dedicate enough time to ensure that their digital transformation program moves with the required speed and value creation focus after the initial launch phase.
  3. Employees pushback: humans like routinees and employees often feel threatened by changes in the status-quo that will result in greater automation, different activities to be mastered and performed, and new organizational roles. This can be particularly challenging during the initial phases of a digital transformation program when the validation of the program positive impact has not been completed yet, and the company cannot rely on internal data to develop confidence in the benefits that will accrue from the proposed changes.
  4. Too many digital options: technology continue to evolve very rapidly and the number of alternative solution providers, entrprise SaaS tools, and marketing and advertising platforms has grown exponentially. Also, the number of options regarding how to redesign internal business processes and how to enhance customers' value proposition is high and often overwhelming. As the risk of making wrong choices is very high, a lack of prior experience can often result in a situation of paralysis by analysis.

Partnering with a digital transformation officer could be very beneficial

"... companies bring in a digital transformation officer... when the CEO realizes the organization can't meet the primary challenge of creating integrated transformation within its current construct".

McKinsey & Company, 'Transformer in chief': The new chief digital officer, September, 2015

"The Chief Digital Officer is a senior executive who sits at the right hand of the CEO and is seen as instrumental to the future of the organization.".

Russell Reynolds Associates, The Rise of the Chief Digital Officer

At both B2B and B2C companies an experienced, highly capable, and properly empowered digital transformation officer will prove to be a great partner for CEOs and top management teams, complementing their industry expertise and leadership capabilities in many valuable ways:

  1. Designing a pragmatic and realistic plan: striking the right balance between short-term impact and longer-term sustainable value creation requires significant expertise and is often a key determinant of success or failure. Setting wrong short-term expectations will force the team to focus on undesireable shortcuts (i.e. price discounts, promotions, etc.) and take the emphasis away from building the new processes and capabilities required to drive sustainable competitive advantage.
  2. Implementing a digital first approach: experienced senior digital executives knows how to create an organizational obsession over the customer and how to continuosly create relevant interactions and frictionless transactions, how to leverage the latest technologies to create data-driven decision making processes, and how to articulate longer digital journeys in smaller stepwise projects to increase speed and agility and to create a continuos learning reinforcing loop.
  3. Facilitating cross-functional collaboration: executing a successful digital transformation program requires a multi-functional approach typically involving sales and marketing, operations, IT and finance. A higly capable senior digital executive will strengthen the top management team with problem solving skills, general management expertise, a high emotional quotient, and strong interpersonal skiils that will result in greater participation and collaboration.
  4. Providing access to a curated network of talented professionals: last but not least is execution and that requires the ability to aggregate and cordinate the work of talented professionals spanning a wide range of domain specific skills (i.e. digital marketing, sales prospecting, front-end and back-end engineering, devops, e-commerce operations, etc.). A proven digital transformation officer will facilitate access to a curated network of talented professionals cultivated and tested over multiple years.

Digital transformation officer is an interim role

Companies operating at scale are not meant to be run in a continuos change or transformational mode. Management is about fine tuning the organization and coordination of capital and human resources to produce superior predictable results.

Digital transformations are about greater risk-taking and experimentation with new digital technologies, processes, and organizational roles in search of a new way to achieve a stronger competitive advantage through better intelligent process automation, a more compelling value proposition, greater agility and better decision making.

Successful digital transformations, therefore, like any other major change management program, must have a dedicated team working in a constrained timeframe but, as clearly articulated in Dr. John Kotter famous 8-steps approach to change management, must end with the integration of change back into the organization.

The true measure of success is when the digital transformation officer role becomes unnecessary.

McKinsey & Company, September, 2015

In a middle market or large company, a digital transformation program will typically last between two to four years. In a very large global enterprise a period of four to six years might be required. Once the benefits of the program have been validated and the new activities and tools scaled and integrated back into the organization, then the digital transformation officer will have concluded their job and be ready to transition into a line position or move to a new company to lead another digital transformation program.