Fierce competition for chief digital officers

Five years ago, hardly anyone had heard of a chief digital officer, yet demand for their skills is now so great that they can command salaries of £500,000 plus generous benefits.

A shortage of people with the right credentials has led to a talent war, says Steven Zuanella, chief digital officer at Zurich Insurance. “Some organisations are offering crazy compensation packages as they bend over backwards to attract these people.”

It is a very different role from that of the chief information officer, whose job — though complex — is more about following procedures and keeping the company’s IT systems running.

The digital role, by contrast, is to lead transformation. The job involves looking for business opportunities that have been enabled by the digital revolution. It also involves focusing on customers and how their needs might change because of technological developments.

Understanding all that the role involves can be difficult, says Mr Zuanella, because it is new and spans the entire organisation, as well as working with outside partners such as suppliers, designers and developers.

Both chief information and chief digital officer roles are necessary and fundamental, says Mary Mesaglio, research vice-president at Gartner, the IT research and advisory group, who calls them “Samurais” and “Ninjas”.

Traditional IT people, like the Samurai, behave according to a set of rules, she says. “They were well respected and that code of conduct could be very useful. The Ninja, as a highly unorthodox fighter, was better at dealing with an unconventional enemy.”

But, she notes, it is difficult for the two roles to be performed by one person and there are often gaps, overlaps or ambiguities between them.

A 2014 Gartner survey of chief information officers found that only a third of companies with chief digital officers were “very clear” on how the role integrates with wider IT needs. Ms Mesaglio says that, in many ways, the digital job is an extension of the chief strategy officer.

Sometimes, the digital officer role is performed by the chief customer officer, chief innovation officer or chief technology officer. There is also overlap with the chief marketing officer and chief operating officer. Other titles for the role cited in Gartner’s 2014 survey included director of emerging platforms, director of digital technologies and head of digital innovation.

Finding people with the necessary diverse skills is difficult, says Richie Etwaru, chief digital officer at IMS Health of the US. “Chief digital officers have to understand products and services, profit and loss, organisational structure and how industries work from regulation to public perception.”

An unusual set of experiences is also useful, says Mr Etwaru. “You won’t get differentiating ideas from somebody who has done the same job the same way for 30 years.”

Post holders need to study the needs of their customers and must be able to anticipate how they will evolve.

Public tastes change faster than organisations can, says Mr Zuanella at Zurich, and galvanising leaders to focus quickly on this is an important chief digital officer role.

Traditional IT people, like the Samurai, have a way of behaving according to a set of rules

CDOs also need to be highly collaborative, skilled leaders who can work with difficult personalities because the job can involve treading on many toes. These qualities are more important than being a good technologist, Mr Etwaru says, because there will be lots of resistance.

“Chief digital officers need a very high level of emotional intelligence. You’ve got to be able to move people with you, not try to build your own fiefdom and put them out of work,” he says.

The best approach for the digital officer is to create a blueprint or business model, then hand it over to the existing management, he says.

When hiring, organisations should be open about their culture and the gap that needs bridging.

Mr Zuanella says chief digital officers are often entrepreneurial and want to do things fast, so it is best to be honest if the organisation is not used to working that way. “Otherwise, it will be like a speedboat arriving in a fleet of oil tankers. The chief digital officer will just thrash around and get very frustrated.”

Consumer-focused companies in areas such as retail and travel were the first to appoint people to the role, but it is beginning to appear in corporate finance, insurance, commercial property and logistics companies.

Even digital companies need a chief digital officer to stay ahead, says Mr Etwaru.

Mr Zuanella, however, sees the post as an interim one, because once an organisation reaches digital maturity, it will no longer be necessary. But they will probably be around for 15 years, he says.

Companies without a chief digital officer or a chief customer officer cope badly, says Mr Zuanella, unless they have people who can work across functional silos. “Lots of companies talk about this, but far fewer really have it.”

It is crucial for chief executives to explain the role to the rest of the management team to ensure they understand what it involves. Chief executives, as Mr Zuanella says, are ultimately responsibility for ensuring digital transformation happens. “It is no good if they are detached,” he says.