Agenda of Russian Chief Digital Officers

Abstract

Digital transformation of business is an increasingly relevant issue for companies across the world, requiring more attention on the part of top management. Appointing an executive focused on digital transformation is a popular, but not the only possible, measure undertaken in an effort to respond to the challenges of the new era. Many believe that the role of CDO (Chief Digital Officer) will prove to be “the most exciting strategic role in the coming decade”. At the same time, there is a wide range of opinions on the CDO’s actual job description and the knowledge and competencies it requires. This study by Moscow School of Management SKOLKOVO will help CEOs understand what role the CDO can and should play in each business context, formulate its range of responsibilities, and assess which knowledge and competencies these responsibilities require. Depending on the nature and the environment of a given business, there are three possible strategic approaches: “fully digital”, “digitally wrapped”, and “digitally spiced”. Each of these requires a CDO, a digital transformation-focused executive, as an important condition for success. However, the range of tasks such a manager handles is profoundly different in each case. In the “fully digital” domain, the CDO virtually becomes the corporation’s key visionary. His responsibilities include ensuring competitiveness with companies “born digital”, which look for the slightest faults in wellestablished business models in order to re-direct financial flows through “digital disruption” to their benefit. With the “digitally wrapped” strategy, the CDO is mostly the executive in charge of organizational development. His priorities are to create an innovation culture, develop human capital, and arrange for the respective re-structuring. Lastly, with the “digitally spiced” strategy, the CDO basically has the responsibilities of a top manager in charge of developing advanced technologies. The legacy system stack can remain with the Chief Technology Officer or Chief Information Officer, upon which the CDO will build, developing solutions based on such advanced technologies as the Internet of Things, Artificial Intelligence or cyber-physical systems. The role of CDO, regardless of the specific industry or company, is defined by a diverse and incredibly demanding set of requirements. The perfect CDO is a super-manager with a variety of functions who actively interacts with other executives and has profound knowledge as well as managerial skills. An effective CDO’s knowledge and competencies may be grouped into the following four areas: 1. Strategy and organisation: understanding approaches to strategy development in the conditions of digital transformation, economic opportunities presented by digital business models, and the respective principles of platforms and ecosystems; investment-planning and investment efficiency management skills; knowledge of organisational design and change management; 2. Consumer experience and design-thinking: insight into the digital consumers’ experience and lifestyle, the ability to analyse the pros and cons of a new product and to turn this analysis into working prototypes, mastered methods of launching new products into markets and receiving market feedback; 3. Production and logistics: knowledge of the industry’s value chains, understanding of key company operations, their strengths and weaknesses; business process re-engineering skills; 4. Technology and data: understanding the modern digital stack; knowledge of company data management strategies; ability to analyse data (including big data) for managerial decision-making; deep insight into corporate cybersecurity. The relative weight of the areas of knowledge will vary depending on the transformation type: while the “fully digital” strategy primarily requires strategic and organisational thinking, the “digitally wrapped” strategy focuses on managing the consumer experience, and the “digitally spiced” strategy focuses on the technology and internal manufacturing processes. Will the CDO role be permanently embedded in the organisational charts, or will it only exist for the duration of the relatively short period of revolutionary changes associated with the current digital technology? Digital transformation, as extensive as it is, is a finite process. It will certainly go on for many years, but eventually, the corporation will arrive at a new quality. What will happen to the CDO at that point? The opinions of our respondents were split roughly in half. Some of them indeed see the CDO as a sort of “professional revolutionary” who will be challenged in staffing a role once the revolution is complete and every corporate director has sufficient digital competencies. The other opinion is that the revolution will never end and the digitally-focused executive who ties together the entire company’s digital agenda will constitute an integral part of any major company’s organisational design. Which of the two is more accurate remains to be seen.