Why every company should have a Chief Digital Officer!

A few days ago, I was back at a company to advise the management on e-business strategy in general and e-commerce in particular. The client sells complex products in the B2B sector and has an international presence. The business has been going well for years and is generating respectable profits. They are conservative when it comes to IT and web matters, i.e. they have a website and an online store, but do not actively work with them and therefore these tools do not generate a significant proportion of sales. So far so good.

Well, one part of the management is of the opinion that the e-business experiment has failed because their customers are simply not online customers, the other part believes that the supposedly poor implementation of the measures is the reason. Question for me: Who is right now?

I don’t think either camp.

There is no such thing as online and offline customers. We know that 65% of all Europeans are now online. 61% say that the Internet enables them to make better product and service provider decisions, regardless of whether they buy the products online or offline. These are personal behavioral changes that have occurred in recent years and do not stop at the B2B sector. This cannot be the case.

Of course, I also looked at the implementation of the existing solutions. The web and e-commerce platforms are not particularly innovative, but they are solid and many companies that are successful online operate at a similar level. So it can’t be that either.

What is it then? The answer is simple: the company is not digitalized. It has not yet completed the digital transformation.

What I mean by this is that it does not take the aspects of digital change into account in all its considerations and decisions. Society, and therefore the company’s environmental spheres, have constantly adapted components of the digital lifestyle over the last 10 years and are actively using them. However, our company does not have the right answers to this because it does not (yet) have any “digital DNA”. It has not participated in the digital transformation, or not to the same extent. There is a good reason for this: there was simply no compulsion to do so, because business is running smoothly.

Companies in economically tough sectors recognize e-commerce as an opportunity. Companies in economically easier sectors see e-commerce as a threat. Exceptions prove the rule.

And it is also difficult. This digital transformation can’t just be tied to one department, such as IT, sales or marketing. Instead, the entire company must take digital components into account when aligning its processes. Easier said than done, I know.

A good solution for transforming analog business into digital business seems to me to be the appointment of a Chief Digital Officer. Equipped with the necessary skills, his or her task is to review business models and processes across the entire company and expand them to include the digital dimension. This could mean, for example, restructuring an entire business unit to be online-based or, after analysis, coming to the conclusion that no digital components can or need to be integrated at all.

The appointment of a Chief Digital Officer is also a strategic statement by a management or board of directors.

Many larger companies have already created such positions and many of these companies can demonstrate respectable results. They are driving the digital transformation forward. Gartner predicts that 25% of all companies will have created such positions by 2015.

Some smaller companies cannot afford such a position. So what can they do? I think that in future we will see various consultancy teams providing interim CDOs to companies in this area or providing the service on a mandate basis. At the moment, there is no provider on the Swiss market. However, I am sure that we will see more consulting in this area in the future. After all, the work of consultants is the pent-up demand of companies. And this is very high, especially in the medium and enterprise segment.