As the hype surrounding digital transformation continues to grow, the prominence of the Chief Digital Officer (CDO) continues to rise. But what is a CDO? You will get a different answer at every company – and when you compare an online retailer with an industrial equipment manufacturer, the CDOs for these companies might have nothing in common in terms of roles & responsibilities.
This position has been around for a relatively long time in the world of CPG, retail & ecommerce, and media ecosystems – where it normally implies an executive in charge of digital marketing or digital “transformation.” That said, even in those industries, the role and scope vary tremendously.
At Landmark, General Partner Scott Zakheim runs our consumer-focused digital media/marketing practice, he shared the following: “When I jump on the phone with a CDO, it’s always a crapshoot in terms of what they actually do. The job can include in-store digital display to CRM or email implementation to sales force digitization and optimization. In other cases, especially with digitally native businesses, the CDO operates as the CMO used to, with a sole focus on customer lifecycle engagement, from acquisition to retention and beyond – just in digital channels.”
The CDO role is confusing enough in those fields (CPG, retail, etc), but it’s even less established at industrial companies, where the role is quite new – most large industrials did not have a CDO 2-3 years ago, and many still don’t. The legitimacy of the role also varies tremendously. At some industrials, the CDO looks more like an innovation scout (lots of looking, no real buying authority). At others, the CDO reports directly to the CEO and/or board, wields a massive budget, and is perhaps a de facto Chief Strategy Officer (oftentimes with the CIO/CTO reporting to the CDO).
But what’s especially interesting to me is functionally how different the CDO role is at an industrial org versus the companies where we’ve gotten familiar with the CDO as a marketing/media leader. Let me give two examples of CDO organizations that we work with at large industrials…
1) Georgia-Pacific – one of the world’s largest pulp/paper manufacturers – has a very impressive digital program that was led until recently by CDO, Rob Barger. The dialogs we’ve had with Rob and his office have focused on two major themes:
- Deploying digital solutions internally within the paper factories for improvements in operational performance and productivity.
- Integrating digital capabilities into the product portfolio (connected paper towel dispensers, etc) to deliver additional value to customers and enable digital business models.
2) Carrier – a major manufacturer of air conditioning & refrigeration systems – has a similarly impressive digital program led by CDO, Bobby George. The dialogs we’ve had with Bobby and his office have focused on two major themes:
- Deploying digital solutions internally within the factories for improvements in operational performance and productivity.
- Integrating digital capabilities into the product portfolio (connected HVAC systems, refrigerators, etc) to deliver additional value to customers and enable digital business models.
These are two very common themes across the CDO orgs at industrial manufacturing companies – digital internal operations and connected product strategies. Some industrial operators don’t have as much opportunity to provide connected experiences to customers (oil & gas, mining, etc), in which case the CDO is often focused entirely on digitizing the internal operations of the company. And in some cases, the industrial CDO is also on the hook for digital marketing, media, website, etc.
So what does this mean for the future of digital transformation at industrial companies? The CDO office is slowly becoming the IT/OT convergence center of excellence – and it is essential for industrials to move towards this functional model. Forward-thinking industrials have already been moving in this direction, but it will be years before this is a standard, well-defined functional area at most large industrials.
Additionally, digital industrial tech vendors will begin to find a consolidated buying center here in the CDO office – finally! These vendors have spent years plotting treacherous paths through these organizations to find budget, having to unite IT, innovation, and the business itself. As the CDO office formally takes responsibility for IoT/I4.0/etc, these vendors will have a more straightforward path to a PO – and to the growth investors have been chasing for years!