Digital Economy Dispatch #088 -- The 3 Faces of Digital Leadership

Digital Economy Dispatch #08815th May 2022

The 3 Faces of Digital Leadership

Over the past few years, the most common requests I receive from large organizations are to review their digital strategies, comment on the progress of digital transformation initiatives, or benchmark existing digital operational models against competitors. As I look across those organizations to get a sense of their activities and context, I start to build a picture of their skills, operating approach, and experiences. After asking a few questions to learn more about their expectations for the future, it is interested how often their real concerns centre on a more focused question: Do we have the right digital leadership in place? How would we know?

Often the basis for these concerns is a growing tension that is building in the organization. Expectations for digital transformation activities are very high. The price tag for acquiring new digital technologies is eyewatering. Acquiring digital skills to install and maintain them requires significant investment. Yet, the executives in the organizations often only hear a cacophony of complaints about how hard it is to get anything done, increasing fragility of the IT infrastructure, lack of progress in digital initiatives, exposure to cyber risks, and increasing gaps between us and the competition.

And please don’t ask for a robust, well-managed return on investment (ROI) calculation for all that spending. No-one seems to be able to offer a financial management plan for all that digital investment that survives even the most basic analysis. What’s to be done?

For many organizations the answer seems obvious: Hire a Chief Digital Officer (CDO). While there are many variations, a CDO is typically defined as a leader who combines business understanding with digital expertise to help the organization to deliver digital transformation through an enterprise-wide digital vision and strategy.

It is a core role aimed at bringing together many different digital strands. Sometimes the CDO will be given a focused set of objectives to take responsibility for one of the many challenges being faced. However, much more often they are given a wide, varied brief to “sort it all out”. With great hopes for this individual and the team they build around them, a high-profile appointment is made, reorganizations take place, more investments are made. Unfortunately, too often the weight of expectations on their shoulders does little other than increase the tension as they are buried under an avalanche of demands for change. Where did they go wrong?

Do You Need a CDO?

There are 2 broad schools of thought on digital leadership. In one, digital leadership is everyone’s responsibility. The goal should be to infuse everyone in the organization, especially those in leadership positions, with the knowledge and skills required to carry out their activities in a world that is fundamentally shifting to digital ways of working. The digital transformation required by organizations is only possible by recognizing the broad impact of digital technology across all aspects of business.

The second approach identifies a specific leadership role that is required in organization to coordinate the substantial digital transformation underway. This role acts as a focal point for various threads of activity to bring a sense of purpose and a robust strategy to guide tasks that would otherwise be dispersed across many different functional areas. Enter the CDO.

In reality, most organizations adopt a hybrid model where both approaches are used. The broad awareness of digital technologies and their adoption is supported with a new leadership position aimed at synchronizing what would otherwise be in danger of being a diffuse, unmanaged effort.

There is evidence that this two-handed approach works. In an extensive IBM Institute for Business Value study with a survey of over 1,500 executives, they looked the impact of a CDO on the success of digital transformation in large established organizations and reached three important conclusions:

  • Hiring a CDO and placing that person in the right organizational structure is associated with higher digital maturity.

  • Appointing a CDO as part of a robust digital transformation program was associated with improved financial performance among organizations of all sizes.

  • The bigger the organization, the more impact of having a CDO to lead the digital transformation efforts.

Establishing Digital Balance

Despite the emergence of the CDO and their role in guiding digital transformation, major tensions persist. From my activities over the past few years, I believe the difficulty lies in a fundamental mismatch of stakeholder expectations. Organizations appoint a CDO hoping to address a wide variety of needs. In practice, however, there are three critical roles that must be adopted by the CDO to ensure success:

  • Engineer. To acquire, architect, manage, and evolve the digital technology infrastructure required to operate effectively and efficiently in an era of massive digital disruption. These technologies must be robust and resilient in the context of rising expectations from users and a competitive landscape where digital capabilities are a major market differentiator for products and services.

  • Entrepreneur. To coordinate, consolidate, and combine common digital technology solutions across various units in the organization to ensure digital transformation is appropriately synchronized throughout the enterprise. This often requires appropriate investments in shared capabilities and platforms, and the promotion of technologies and practices to ensure alignment around internal and external standards.

  • Evangelist. To promote, energize, and drive digital transformation activities throughout the organization to build momentum and encourage stakeholders to prioritize their activities to accelerate execution of the organization’s digital strategy. To bring enterprise-wide change in any organization requires sustained effort over long periods of time using a variety of social skills and establishing a team a change agents in key parts of the organization.

Establishing the right balance between these roles is essential to success in digital leadership in every organization. Tensions grow when key stakeholders across the organization have mis-matched expectation about the skills, priorities, focus, and capabilities of the CDO and their team.

I often find that the most important task that I carry out in my digital transformation review exercises is to map the different expectations based on these three roles. The symptoms are often quite clear:

  • In one organization there was frustration that they were losing ground to competitors because they were not being sufficiently ambitious in their adoption of industry-wide standards. Yet, the CDO they had appointed was the former head of IT with a 20 year history of developing the home-grown digital infrastructure that he was now being asked to replace with what he considered an “inferior 3rd party” solution.

  • In another case, the organization appointed a CDO renowned for her conference talks, blog posts, and numerous social media activities. Then they wondered why the CDO’s team contributed no meaningful hands-on support to the crumbing IT infrastructure that was consuming so much of the organization’s attention.

  • Another situation saw continued major disagreements between the head of IT and a newly appointed CDO over future strategy. Both were focused on the organization’s success but saw the priorities from very different perspectives. The executive leadership had not established a framework in which they could resolve this diversity, leaving operational teams confused and conflicted about how to move forward effectively.

Taking the Plunge

Leading digital transformation takes skill, persistence, and a broad perspective on how to address current challenges while driving to meet future aspirations. Without the right balance, tension is growing in many organizations. A Chief Digital Officer (CDO) can help. But only if you are clear on how you manage their 3 distinct roles of engineer, entrepreneur, and evangelist.

Digital Economy Tidbits

Forget personalization, it’s Wrong and it Doesn’t Work! Link.

An interesting…and provocative…article looking at the perils and pitfalls of using digital technologies to optimize personalization activities in marketing. Makes a strong case for the fallacy of personalization at scale.

True personalisation is unachievable due to poor data quality, but it’s ineffective anyway and should be replaced with creative that resonates with everyone.