‘Not just the digital czar’: How the role of chief digital officer has evolved

Alexa von Tobel, who was appointed as the first CDO for financial institution Northwestern Mutual this year, agreed that the CDO and CMO roles are now complementary. She said her team is accountable for key digital client touch points like the production of financial plans, paying bills and reviewing balances, while the marketing team is responsible for advertising, field marketing, sponsorships and more to strengthen the Northwestern Mutual brand.

“Essentially, the digital team is responsible for driving digital client and adviser experiences, from mobile to web to emerging platforms,” she said.

The CDO role would seem an anachronism at a time when nearly every company is steeped in technology. But far from fading, the CDO role has in many cases grown in importance at many legacy businesses still struggling to adapt to the rapid changes of digital technology. The CDO role of the past tended to fall under the marketing department and was often focused on e-commerce. Many CDOs were something of figureheads, without their own departments. But at Tumi, NorthWestern Mutual and other brands including Nike and Morgan Stanley, the CDO role has matured — and taken on greater responsibilities.

For instance, Lisa Schneider, who was promoted from chief digital product officer to CDO for Merriam-Webster last year, thinks this title change reflects both greater responsibilities and overall organizational structure shifts. As CDO, Schneider doesn’t only oversee digital product management, design, UX and product development as she used to but also editorial, marketing, social media and analytics.

“This reflects the company’s understanding that digital isn’t a single department but simply a part of how we do business,” said Schneider. “These groups all roll up to one CDO so that we can ensure communication and collaboration under a unified digital strategy as part of our core DNA.”

From a recruiter’s perspective, Ryan Bulkoski, partner of executive search firm Heidrick & Struggles, said that CDOs have become more business-oriented, and some even report directly to CEOs. “CMOs are more about branding, PR and marketing communications, while CDOs are focused on user experience, user interface as well as product management and development. Sometimes, we see CDOs even own engineering resources,” he said.

Jerry Bernhart, a marketing recruiter with over 30 years of experience, agreed, saying that today most big companies want CDO to be a separate executive role from CMO and sit side by side with the CEO. “CDOs are now even put in the queue for CEO succession,” said Bernhart. For instance, Kevin Walsh, former CDO for Carat’s Asia Pacific operations, was promoted to the agency’s CEO in April of this year.

A new CDO study by PwC analyzing the world’s 2,500 largest public companies shows that 19 percent of them designated an executive to lead their digital efforts in 2016, up from 6 percent in 2015. And over 60 percent of CDOs were hired in 2015.

Meanwhile, CDOs are more likely to have a technology rather than a marketing and sales background. The PwC study shows that in 2016, 32 percent of CDOs’ primary expertise was in a technology field, compared to 14 percent a year prior. In comparison, the percentage of CDOs with marketing, sales and customer service backgrounds fell to 39 percent in 2016 from 53 percent in 2015.

That’s because big companies no longer view digital as just a marketing tactic like social media and mobile apps. Digital has broadened to encompass questions like how companies can apply emerging technologies like blockchain, artificial intelligence and augmented reality to areas like consumer experience, recruitment and employee engagement, said Chris Curran, chief technologist for PwC.

“CDOs are no longer just the digital czar — they are the orchestrator within their company,” said Curran.

Louisa Wong, who became the first CDO for Dentsu Aegis Network last year, echoed that sentiment, saying that 70 percent of her time is spent on providing strategic consultancy for clients, helping them understand how technology and data transform not just digital but also all the media formats. “You need to understand the data and new technology not only from Facebook and Google but also from Oracle and IBM,” said Wong.

Every organization is different, but Bulkoski said when companies hire a new CDO, functions like digital marketing, digital analytics, social media and user experience design that historically reported to the CMO may shift to the CDO. The growing complexity of the position means it’s difficult to fill. Bernhart said that, on average, he conducts only one CDO search every three months because it’s so time-consuming and resource-intensive.

“The position requires a wide range of competencies: You need to have strategic skills, understand data and technology, execute for business results, be able to work in a complex environment and sit at right hand of the CEO,” he said.

Michael Adler, senior managing partner for executive search firm AC Lion, added that his biggest challenge when looking for CDOs is figuring out if those candidates have the balance of strategic and executional abilities. “A lot of C-level executives don’t have the ability to roll up their sleeves and get their hands dirty,” he said.

Bernhart and Curran think the role may present cultural challenges in a legacy organization. CDO candidates likely come from startups or entrepreneurial companies and may view legacy businesses as old-fashioned entities that move too slowly. And the CDO may be much younger than most people on the senior executive team.

“Some organizations want to shake things up and look for a CDO with startup experiences, while others may not realize what they get themselves into until they have hired the person,” said Curran. “A person from a nontraditional background may question lots of things. You need to prepare for that.”