This post is inspired by the article Looking for a CTO. Must be able to go to meetings and do emails on LinkedIn. Please note that a Chief Digital Officer must not necessarily be a job function by itself. It can as well be a role taken by another person at C-Level, even the CEO himself.
So adapting the definition of the mentioned article:
The Chief Digital Officer is a provider of digital advantage for the company.
By this article itself, you see that “digital” is not a synonym for technology. And it is neither an umbrella term for projects using technology to “digitize” products or processes nor an extension to the company’s strategy. It is about completely re-thinking about how to do business.
Following that, “digital” is not something that just can be delegated to a CDO. It rests upon the mindset of the whole company. Every manager has to become a “digital” manager in future. You can read more about the basics of digital transformation in this excellent MIT Sloan article.
Yes, a CDO has to lead “digital” initiatives and projects himself*. But much more important, he has to make sure, that this re-thinking takes place in a welcoming manner all over the company in order to make the transformation happen. So he is a strategist and change agent, an evangelist and innovator, a visionary and practitioner, an enabler and facilitator, an educator and storyteller, a coach and sparring partner and a business and IT guy. And last but not least he is a trend and technology aficionado.
Looks like a CDO has a challenging job. So what KPIs should he keep in mind? The most important ones are 1 and 0. Sounds easier than it acually is.
KPI 1 means individualization of products, i.e. products are tailor-made for a customer (group). In production, this is known as lot size 1. So one of the first tasks of a CDO is to analyze data (among other methods) to get a better picture about what customers want. Actually, “digital” always starts with a better customer understanding.
Individualization sounds nice, but doesn’t work if it leads to a cost explosion. So reaching a completely new level of automation is crucial.
KPI 0 means zero marginal cost. You are lucky, if you sell pure digital products, because once they’re produced, a second sale won’t cost you virtually nothing. If you sell physical or hybrid products, you should leverage technologies like IoT, 3D Printing and AI in order to make production more efficient and individualized.
I hope you see that these two KPIs combined mean a huge economic potential for every business.
Keep in mind that 1 and 0 are merely symbolic figures and that a CDO cannot be made responsible alone for those. Instead they should be seen as a long-term goal, a CDO subordinates all his activities.
* I use the masculine form throughout this article for the sake of convenience. But of course, a CDO can – and should – also be a woman!
