The challenges faced by chief digital officers
Changes in digitalisation often create and strengthen tensions and contrasts in a workplace. More and more companies are therefore appointing special chief digital officers (CDOs) to handle the change and lead the digital transformation.
‘Employees often struggle with understanding the concept of digital transformation and what this means to an organisation. Many are sceptical of the changes, and some perceive digitalisation as a threat’, says Kjersti Berg Danilova.
She defended her thesis ‘Leading change across the organization’ at NHH on 23 January.
Kjersti Berg Danilova's PhD thesis ‘Leading change across the organization’ comprises three articles. In the first article, Danilova conducts a systematic literature review of research on process owners. In the second, she investigates what is required to make process ownership work, based on an international expert study. The third article is based on interviews with 20 chief digital officers (CDOs), and explores how they understand and manage tensions related to digital transformation.
CDO as a management role
Digital transformation entails the processes companies implement to, on the basis of digital technology, become more efficient, change their current services and products or create new ones, and ‘focus on the customer’.
Organisations are increasingly choosing to appoint new managers with special responsibility for implementing digital changes across company boundaries. The title CDO (chief digital officer) was launched as a trendy new management title a few years ago, and more and more CDOs have appeared in business and industry in recent years.
They encounter several challenges. One of the CDOs interviewed in Danilova’s study, says the following:
‘It’s extremely difficult to make the organisation understand that we cannot keep doing business this way. It’s an extremely conservative business, where avoiding risks and not taking any chances are the basis of our existence.’
‘Change processes often take place across the established organisational structures. Different disciplines and groups can have different and, in some cases, conflicting goals and interests.’
Based on her interviews with the CDOs, Danilova has divided the problems into five main categories. The challenges the CDOs face are:
- Existing versus necessary expertise
- Individual interests versus the common good
- Tensions between business units and the IT department
- Tensions between different business units and the organisation as a whole
- Tensions between the CDO and existing structures
‘Among other things, the informers say that the organisations’ digital competence is very low, that there is limited understanding of what digital transformation is, and that it is difficult to gain acceptance for the changes they believe are necessary.’
Perceived as a threat
The second item on the list – the tension between individual interests and the common good – is a recurring issue and a classic paradox in all organisations.
‘With digital transformation, this takes on a very specific form and the tension intensifies. For some, changes in digitalisation are perceived as a threat and something that could lead to redundancies. To the organisation, on the other hand, the changes represent future success and survival.’
Tensions and problems between units and the organisation as a whole are based on silo mentality and groups that look after their own interests and are less concerned with the company’s main goals and interests. Danilova’s informants told her that different departments initiate their own digitalisation projects based on local logic.
‘This practice leads to a situation where knowledge, resources and technical solutions are not shared and optimised across organisational boundaries’, says Danilova.
Dialogue with the organisation
‘How do the CDOs solve this problem?’
‘The findings show that CDOs contribute to organisational changes by handling organisational conflicts and tensions, particularly by setting common goals and encouraging cooperation, understanding and ownership across decision-making processes, domains and interest groups.
One important precondition for succeeding with this is to identify and highlight the strengths of the different units’ and domains' expertise and perspectives, and how they complement each other’, says Danilova.
‘The CDOs I interviewed had both good technological insight and a good business understanding, and work actively on creating a dialogue with the organisation, as well as common meeting places for the units and domains.’
The PhD thesis contributes to both research literature on process management and digital transformation, and to research on change management across organisational boundaries.