The CDO and the board

The chief data/digital officer role has risen in prominence in the past decade to manage the business side of digital technologies, but as seasoned cdos explain, boards still have plenty to learn about getting digital transformation right.

The first waves of digital transformation hit in the 1950s and ’60s. Only large organisations could afford mainframe computers to do the grunt work of recording, processing and storing business data. The “office” desktop computer revolution began in the 1980s and the internet went mainstream in the 1990s.

Organisations now focus as much on the human interaction with them via digital (computer) systems, as the systems themselves. As Dale Hurley, chief digital officer (CDO) at fintech startup Avenue asserts, millennials expect to interact with an organisation via whatever method is most convenient. “If you talk with millennials, there’s very much a mindset of not wanting to have to speak with a person in a business unless you absolutely have to,” he says. “We want to interact with businesses on our phones mostly, maybe on our laptops. I’d much prefer to get on with what I need to do, not answer questions like ‘How do you spell your name?’, because having someone input that data for me is a very old-school experience.”

Getting digital right is about delivering experiences humans will willingly engage with, emphasises Grant McDougall, the Australian CEO and CDO of AI-driven business insight platform BlueOcean, based in California.

“Every business is digital and therefore organisations need leaders responsible for owning the complete digital experience for the customer at the most senior level,” he says. “In the US, CDOs have been in vogue for at least 10 years as more brands focus on the customer-facing business impact of digital. It’s a different role to the chief data officer, who is focused on data and the rules to manage it within the organisation, or the chief technology officer who manages tech investments and how people use them.”

Does your organisation need a CDO?

As McDougall identified, the rise of the CDO began midway through the last decade as organisations scrambled to transform their customer-focused digital competencies.

A PwC study from March 2019 found the CDO-hiring frenzy has slowed down since its peak in 2016. In 2019, just a little more than a fifth (21 per cent) of companies had a CDO, and more than half (54 per cent) of CDOs had board-level status. “Leaders at many companies now believe that putting a single person in charge of digital transformation may not be the best approach, because it is an intrinsic strategic priority across the whole business as agility becomes critical to survival,” noted the report.

Monty Hamilton, who served as a partner in digital transformation at PwC Australia from 2017–19, and is now the Melbourne-based CDO of Canadian telecommunications firm TELUS, is not convinced the CDO role should exist in perpetuity.

“To some extent, the CDO role should be a moment in time or chapter for transformation — but it is an important role during that transformation,” he says. “For years, many organisations tried to work out where digital resides, although digital is a mindset more than a department. So the most important task of the CDO as it relates to reporting to the board, is linking the cultural change with a technology capability to offer customer-relevant products and services in the market.”

However, Hamilton also agrees with the authors of PwC’s CDO study that if an organisation hasn’t actually had a CDO yet, now is the time to appoint one.

For its part, PwC Australia has had a chief digital and information officer (CDIO) since February 2017, when it appointed Vishy Narayanan. In June 2021, Narayanan was appointed to PwC Asia Pacific CDIO and became a director. He was replaced as CDIO by Jacqui Visch, previously technology and data officer for AMP.

Visch says her responsibilities start at the client side, and she brings together the right processes, technology assets and channels to create business value, including revenue streams. “While the chief information officer role typically has operational responsibilities, the CDO role is more focused on client outcomes, and in many cases will have P&L responsibilities to drive revenue growth through a digital channel,” she says. “The CDO is at the intersection of customer experience and technology, with an insatiable appetite for innovation and customer-centred design.”

Hurley agrees that organisations need a senior leader explicitly focused on delivering on the promise of putting the customer first. “CDOs are important because they focus on data-driven strategy and innovation,” he adds. “You need someone to take the lead in creating exceptional customer experiences across all channels and to focus on digitising internal processes that give an organisation the biggest bang for their buck.”

Some organisations might be tempted to take small incremental steps towards becoming a proper digital business warns Simon Bligh, a former CDO and now CEO of Australasian data analytics firm illion (formerly trading as Dun & Bradstreet).

“I’m still amazed by the slow pace of change,” says Bligh. “The pandemic has helped, but too often companies are going at the pace they are comfortable with. They don’t look at the art of the possible, and they lack change agents to digitise. If you’re serious about giving your customers and the business the best possible experiences, then you need someone with the courage to act. There is significant value in exploring new data-driven business cases. Not everything will work, but at least aspire to get seven out of 10 to work — you’ll learn something in every case. Learn how to fail fast and focus on the activities that will smash it out of the park.”

A whole-of-business responsibility

The City of Melbourne recognised the importance of having a senior executive manage its response to digital disruption in 2015, recruiting the head of its Smart City Office, Michelle Fitzgerald MAICD as CDO to drive Melbourne’s smart city strategy.

“There are nuances around the CDO role for a city versus a bank or other commercial organisation, but the context for creating the role is the same — every sector is being digitally disrupted,” says Fitzgerald. “When I was appointed to the role, the CEO said, ‘If we have an executive focused on it, we’re more likely to get more value from digital for our residents and our community’. Over time, my role has expanded to include managing the risks and opportunities and helping build digital literacy and confidence across the business as well as the city. However, ultimately, digital needs to become a whole-of-organisation responsibility.”

Bligh agrees, noting part of illion’s work with clients is helping them realise the value of the data generated through every digital channel and activity. “Data is becoming a battleground,” he says. “If you’ve got better data, you make better decisions.”

The key to unlocking the value of an organisation’s data is to remove the boundary between the digital department and the rest of the organisation, adds Hamilton. “Sometimes, it’s just a theoretical barrier and sometimes, there are diametrically opposed cultural differences between departments to resolve so that the fences can come down. My role evolved from being the operator of a digital island, with a few hundred digital practitioners, to being the custodian of digitisation right across TELUS — which is a $40b company — focused on developing 24,000 digital practitioners.”

It’s important a CDO knows what the organisation’s digital technologies are capable of, but they should also gain an understanding of what people in the organisation are capable of so they can steward successful digital transformations, advises McDougall. “A good CDO is a master collaborator with empathy and real love of people,” he says. “When you understand the diverse perspectives, ideas and talents people can bring to each challenge, you have more to work with — and you’ll be more successful at getting the best from people.”

Digital superpowers

AICD chief digital and information officer Vince DiChiara MAICD explains how data insights are guiding the AICD to design more relevant services — and points to an exciting and personalised future for members.

The AICD’s commitment to helping build your knowledge, capabilities and connections is being strengthened by R&D aimed at delivering more personalised member experiences, whether you’re an aspiring director or well-established in your board career. Our digital strategy draws on member information, supplemented by insights into how you interact (or prefer to interact) with the AICD. We recognise we can do more with digital technologies to meet member needs, so we’re applying the core principles of “jobs to be done” to the design process: the more we understand what “jobs” or outcomes you need to fulfil, the better we can help you achieve them.

Using data intelligence to enrich member-centred services

Our understanding of member career journeys and the industries in which you lead, helps to personalise some of our existing services. Of course, we know we can always improve by. drawing on the “nudge theory” concept, and information you share or is publicly available. For example, if you are appointed to a new board position, we can suggest professional development to help you excel in your new role.

Having firsthand experience in both the financial services and public sectors, the delivery of personalised digital experiences can provide enormous value to the customer.

In the AICD membership context, when you attend events, we may draw on membership data insights to link members with similar interests or career stages. Connecting with the community of directors, sharing knowledge, and building on ideas is something AICD members are looking for to supplement their experiences at the events we host.

Designing a more personalised AICD curriculum

We are also drawing on member data and feedback to help us pivot the AICD curriculum and its formats — a recent example is the focus on the delivery of the Company Directors Course to an online format.

Also, by specifying your learning preferences and desired outcomes, we can bundle and unbundle the curriculum to set up a development program that suits your calendar, supported by tools to validate your progress. We could help schedule your course at a granular level, with reminders about what’s coming up, and a guide to the resources you need, all at the right time and format that suits you.

I also see a future where Internet of Things (IoT) sensors are used more widely in education to track mental focus — and paired with AI to observe and adjust each session in real time. A machine can analyse your feedback and re-orient the intensity of learning in response to whether you need a break or can pick up the pace.

It can validate your comprehension as you go and if you need to revisit a topic, it could offer alternative formats to help you absorb and verify your knowledge more efficiently.

AR and machine learning for future boards

Based on the concept of a “digital twin” and the virtual representation of a boardroom using AR (augmented reality — interactive digital experiences presented in a display or headset so they appear to be overlayed on the real environment) could help individuals or boards test approaches to challenging scenarios. Participants can also test their performance in a simulated board meeting, using IoT sensors to monitor focus, stress, and mental agility.

You could explore multiple approaches to issues such as cybersecurity or environmental, social and corporate governance, then receive feedback on your responses along with individual and group scores benchmarked against others in your industry.

If you’re willing to share that rich data — securely, anonymised and confidentially, of course — you open up greater opportunities for personalised coaching, mentoring and education to boost your performance and the board’s.

Further, board minutes, documents or video recordings and audio transcripts from previous meetings, could be analysed through machine learning (ML) against benchmarks to generate a coaching or training program, or provide an analysis of the meeting sentiment.

We can see how digital technologies are transforming education and connection, which are at the core of what the AICD does. The AICD is an organisation that empowers directors for the future, and that future is here.

What boards need to discuss with CDOs - an executive perspective

How are we measuring our progress in digitisation?

“Boards need to review the short, medium and long-term goals of digitisation with clear measures such as net promoter score, client and people journeys mapped, processes automated and cost to serve. They also need to look at how the CDO and firm’s operating model will evolve to align to the digital outcomes, for example, people, process, tools, technology and governance.” Jacqui Visch, CDIO PwC

Are we meeting our customers’ expectations?

“If you can’t keep your customers happy, you’re not going to be in business. Boards and the CDO need to look at ways to improve customer experience. Millennials and Gen-Z expect to be able to digitally interact with businesses — and they expect an omni-channel experience. They’re frustrated when self-service isn’t an option. It’s also crucial you look at what causes people to abandon your business. Take a data-driven approach when analysing which pages and input fields would be the final moment someone would abandon an interaction. What was the friction causing the abandonment? Then use A/B testing to identify how to reduce or remove the friction point.” Dale Hurley, CDO Avenue

How are we managing cyber risk?

“Cyber risk should be a regular item on the board’s risk management agenda — and in a lot of organisations, it now warrants its own board subcommittee. Think of your data as an asset that needs to be nurtured and protected. Everyone in the organisation needs to understand their role in protecting data and regular educational updates about cybersecurity are essential. But you can’t just rely on internal controls because the threat vectors are rapidly evolving. Our organisation engages three external services to monitor and test our cybersecurity, and we’re benchmarked against similar organisations so we know where we need to improve our security.” — Simon Bligh, CEO illion

Why boards need a CDO at the table

Partnership for the transformation agenda

“I see the CDO role as a strategic adviser and partner to our executive and governance boards, working with them to shape and deliver on our ongoing transformation agenda. In the era of digital, even those slow to the game require a strategic agenda on how to digitise for growth and digitise the firm to remain competitive.” Jacqui Visch

Engagement in real transformation

“You need someone who represents the modern — digital — context of business, who understands the technical components of digital and can explain the results more than just reporting of on time/on budget. When the CDO is reporting to the board rather than functional heads, it changes the dynamic of the conversation because you have executives making decisions about changes. Otherwise, too often, ‘digital’ transformations are in name, rather than action.” Grant McDougall

Translate the digital vision

“Success in digital comes from sponsorship at the top. If you’re looking to transition from an analogue business to a digital, or at least a hybrid business, you need someone at the table who’s done that before, knows how to take the business on the journey and can translate tech-speak into business- speak so the board understands and supports the vision.” Michelle Fitzgerald MAICD

Connect purpose and culture

“You want someone who understands technology, but also has the people and culture mindset. A CDO’s role at the table is to connect the company’s purpose, values and cultural strengths to technology and connectivity to make that happen.” Monty Hamilton