Even the biggest companies seem to struggle with digitization, which still has a shaky hold in the ranks of the DAX. Most of these firms do without a Chief Digital Officer and leave the digital transformation to other third-tier managers.
28 Oct. 2015
In all the buzz about the digital transformation in business IT and who needs to steer this necessary change in the company, the title of Chief Digital Officer (CDO) is being mentioned with increasing frequency. Only about 1,000 managers worldwide hold this title so far, but this number is expected to double to 2,000 by the end of the year. At least that's the prediction of the CDO Club, the first-ever professional association dedicated specifically to this new third-tier position, founded in New York in 2011.
4 DAX and MDAX companies have a CDO
CDOs are the key innovation pilots for every aspect of digitization in their organization. Their primary tasks include serving the company's target groups with perfectly tailored products and services – across any national or continental boundaries. They roll out new technologies and develop new business models.
80 companies under the microscope
While CDOs are on the rise overall, a study by HR consultancy Heidrick & Struggles reveals that the Chief Digital Officer in Germany does not yet enjoy a well-defined role.
For their “German digital governance & leadership study,” Heidrick & Struggles surveyed 80 large firms on their approach to digital transformation within their company and asked them who in their organization held ultimate responsibility for bringing the transformation about. The sobering result: Chief Digital Officers are still extremely rare in Germany.
Organizations not yet in sync with the digital age
Only five percent, or four of the 80 German company listed on the DAX 30 and MDAX 50, have created an executive position designated Chief Digital Officer to lead the digital transformation.
And only one of these four companies, ProSiebenSat.1 Group, has the CDO on the Executive Board: Christian Wegner as Executive Board member for Digital & Adjacent heads the diversification area of ProSiebenSat.1 Media SE.
“DAX and MDAX companies remain structurally out of sync with the digital age,” summarizes Wiebke Köhler, HR expert and partner at Heidrick & Struggles and co-author of the study, in presenting the results to Handelsblatt.
You might think that the reason there seem to be so few CDOs in Germany is simply the unusual title – that there really are CDOs in terms of function, but with a different name.
However, this is true for only 16 percent of the companies surveyed. These are the ones who report having a manager in charge of digitization who is not designated a Chief Digital Officer.
By contrast, 79 percent of the companies entrust other third-tier managers with this task, in particular the presumably digitally savvy Chief Information Officer (CIO) or Chief Technology Officer (CTO), but also very often the Chief Financial Officer (CFO).
Under these circumstances it's worth taking a look at the communication channels between the digital manager and the Executive Board, and what is clear is that very few digital managers report directly to the CEO – just 15 percent according to the study.
Nine percent instead report to the Chief Operation Officer, and another 11 percent to other board members. And one digital manager in ten has no direct link to the Executive Board.
Not yet on board
The study leaves no doubt that, structurally at least, digitization is not yet fully on board in German firms. But the radical transformation that everyone sees as inevitable can only be successfully managed if the responsibilities are bundled – ideally in a single person with a strong foothold in the top echelons of the company. Otherwise resistance can be too great. But for now, CDOs are almost as rare as unicorns.