How Do You Know if You Need a Chief Digital Officer?

How Do You Know if You Need a Chief Digital Officer?

At a recent meeting, a select few heads of HR at global companies were having a high-level discussion on digital business models when one participant from a big consumer products firm brought the conversation back down to earth: “On a practical level,” he asked, “what is the value of having a chief digital officer?” He went on to explain that he was the only executive in his C-suite who had experience in a digital company and was trying to figure out how to drive digital business transformation at his organization.

This is a question that many experts and pundits have weighed in on over the past several years, with some predicting the demise of the role, while others believe it can have tremendous value. Our own data at CEB, now Gartner, suggests that about 1 in 5 companies has a dedicated leadership position for digital business transformation. Just slightly more (1 in 4) have an overarching digital strategy for their entire enterprise. (CEB CIO Leadership Council members can read more about what we expect the digital enterprise to look like by 2020 and how organizations are getting there.)

Many organizations are asking this question: Do we need a chief data officer? The broader question, however, is what governance structure best enhances the focus, speed, and scale of your digital transformation initiative—and there’s no one right answer. This was an important takeaway from the discussion at our meeting: All participants seemed to agree that organizations need some sort of dedicated digital governance structure, but having a single leader (other than the CEO) in charge of it isn’t necessarily the right solution for all organizations.

The HR leaders whose organizations had decided against appointing chief digital officers said they had done so because they tended to be more centralized in both structure and leadership philosophy. They were more confident in being able to set a consistent tone throughout the organization that digital business transformation was every leader’s responsibility. That said, these chief HR officers were careful to note that they did have some governance structure in place to ensure that the right people were making the right digital strategy decisions at the right time. These structures ranged from having leaders who were digital champions across the organization, to a small committee reporting to the CEO on digital matters, to standalone digital business operations where there was a team incubating new digital business ideas.

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SimCEO: How Simulations Build Strategic Leadership Skills

SimCEO: How Simulations Build Strategic Leadership Skills

At First Round Review, New Relic’s CIO Yvonne Wassenaar shares how her company used simulations to navigate a challenging period of growth and change:

Wassenaar, then the SVP of Operations, set a goal: Drive understanding and alignment across the top 30 company leaders so they could all more effectively execute and support each other in the move to enterprise. To prepare the simulation, Wassenaar partnered with BTS consultants and asked for input from the finance team, with about 15 people who were interviewed in advance of the exercise. The process took about six weeks.

The setup of a simulation was simple: Teams competed against each other running the company over a three-year period. “Done right, it’s a lively and engaging process. We played three rounds, and each round of the game represented a year. In each round, teams made a set of trade-off decisions and investments that were run and scored against expected trends built into a premade forecast model kept secret from participants until the simulation. To keep it interesting, we threw unexpected events that required teams to react, like a competitor making a hot acquisition or a sudden security breach,” Wassenaar says. “After the simulation, the teams were scored and ranked by highest revenue, profitability and customer satisfaction. Then the teams debriefed and examined their performance. At the end of the ‘three years,’ the team with the highest weighted score won.

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