Nineteen percent of the world’s top 2,500 companies have appointed an executive, commonly known as a chief digital officer (CDO), to oversee the digital transformation of their business, according to the results of a new study about the role from Strategy&, PwC’s strategy consulting business.
Though this number might seem modest, it more than tripled last year’s figure, of only 6%. Sixty percent of the digital leaders identified in our most recent study have been hired within the past two years.
Strategy&’s 2016 Chief Digital Officer Study looks at the top 2,500 public companies around the world by market capitalization to better understand how many companies have appointed a digital leader, who they are and where the position fits into companies’ hierarchies. For the purposes of this study, the CDO is defined as that executive, no matter the title, who has been given the task of putting into practice the digital mission of his or her company or business unit.
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In light of the significant increase in digital leaders across industry, company size and region, companies would do well to start believing the hype around the new position.
- Companies in the financial services and consumer-focused industries have the highest digital leader ratio. According to our study, 35% of insurance companies have digital leaders, and 27% of both banking and consumer products companies do, as well.
- European companies are hiring CDOs at faster rates than companies elsewhere (38% in Europe vs. 23% in North America, 13% in South and Latin America and 7% in Asia-Pacific).
- Larger companies continue to remain ahead of the curve in appointing digital leaders. The percentage of companies with CDOs by market cap peaks at 33% for Quartile 4, then decreases to 18% for Quartile 3, 15% for Quartile 2 and 10% for Quartile 1.
Creating a unified vision for digital
“For a growing number of companies, it’s just not feasible any longer to spread out various digital efforts among separate business units,” says Pierre Peladeau, a leading digital practitioner and study co-author with Strategy&, partner with PwC France. “It may work during early stages of digitalization, but as a company moves toward a more advanced stage of digital maturity, a unified approach is needed to execute a more comprehensive digital strategy.”
Taking the helm of a holistic digital strategy means different things for different companies. While some look externally for digital leaders, others engage existing leadership and a diverse group of stakeholders to help manage the transition. For these reasons, digital executives come in various forms, with a variety of different skills in tow. While marketing and sales-backed leaders dominated last year (34% and 17%, respectively), this year 32% of digital leaders bring technology backgrounds to the job, up from 14%.
“One of the most daunting challenges for any digital leader is how to develop new digital applications at the same time as they’re dealing with legacy IT systems that have been vital to a company’s operation for years,” says Mathias Herzog, Strategy& co-author and partner with PwC US. “As this becomes more and more apparent, we should continue to see a growing number of executives with the technical expertise necessary to navigate a company’s multi-faceted digital assets.”
Knowing how to work within these constraints while simultaneously maintaining the operational agility needed to move digitalization efforts forward will be key for any incumbent digital leader.
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“The CDO’s role, by definition, is transformational,” says Olaf Acker, co-author and Digital Services leader with PwC Strategy& Germany. “Which means anyone assuming the role has to balance the old technologies with the new, technical expertise with an understanding of internal organizational mechanisms and a vision for a company’s future that also aligns with its longstanding mission.”
Strategy& examined the global top 2,500 listed companies by market capitalization as of July 1, 2016, as defined by Bloomberg.
For more information, please visit www.strategyand.pwc.com/cdostudy. A copy of the study and breakdowns by industry, company size and geography are also available from the media contact.