Who will be the “leader” of digital transformation in the enterprise? 

The current business landscape urgently needs significant advancements like digital transformation – it will reduce costs, save time, improve work quality, and enhance labor productivity. Therefore, businesses are in great need of a leader with the “right caliber” to guide them in the digital transformation race. So, who is the most suitable person for this position? Read this article by 1Office to gain a new perspective and find the most suitable answer.

1. The Digital Transformation Leader – What Do They Do?

An article published in the Harvard Business Review mentioned why businesses need a true digital transformation leader. This means that to lead a business’s digital transformation, there needs to be someone with the expertise, experience, and a sufficiently broad vision to map out strategies for the company when applying digital transformation, as well as the methods to implement it. Remember, digital transformation is not just about applying software to business management problems; it also involves changing employees’ mindsets and keeping up with market trends. The digital transformation leader will have important roles such as:

– Building a bright future for the business by applying digital transformation: What changes will the business undergo before and after applying digital transformation: the personnel structure, work processes, and how projects and tasks will be managed. How will that business differ in the digital world compared to its old version (before implementation) and its competitors in each field. Digital transformation leaders are required to have the clearest understanding of the nature of digital transformation: turning mindset into action. They will build step-by-step processes to apply the transformation to the business.

– Engaging employees: Employees within the business will be the first to experience the benefits of digital transformation when it is applied to the business model. They need to see the benefits of digital transformation for themselves – saving time by eliminating many manual processes, maximizing work productivity, helping them work more productively, efficiently, and with greater focus. The digital transformation leader must convey this positive energy to employees and candidates during recruitment to promote a more unified and effective digital transformation process within the business.

– Breaking down leadership-level silos to jointly drive digital transformation: This means creating alignment between the leaders of each department, such as Sales (CCO), Marketing (CMO), Information Technology (CIO), etc., to jointly drive digital transformation. Digital transformation aims to use the advantages of technology (the part related to the CIO) to serve the need to optimize revenue in business (the advantage of CCOs) as well as to find and care for customers. And most importantly, the marketing department – where the CMO is in charge – is the place to understand current global trends and what customers need, thereby contributing to the right strategic direction. Therefore, it can be said that the digital transformation leader will be the link connecting managers to find the most accurate direction for transformation.

2. The Traditional C-Suite (CEO – CMO – CIO): What is Their Role in Digital Transformation?

It is easy to see that among the senior management positions in a business, the ones most likely to take on the role of digital transformation leader are the Chief Executive Officer (CEO), the Chief Marketing Officer (CMO), and finally, the Chief Information Officer (CIO).

The Chief Executive Officer – CEO is the person who directly runs the company; all company activities are related to the leader’s vision and the manager’s ability to set a development direction. They understand how their business operates as well as its position in the current market. CEOs are the ones who can easily make decisions related to the company’s finances and budget, as well as direct its development path. Next, with their experience, they can learn and network with a broad enough circle of acquaintances to learn valuable lessons from previous successful case studies and apply them to their own business. However, with the enormous daily workload of CEOs, from reports to departmental meetings, is the CEO the best position to lead digital transformation? They will often look for someone who seems more suitable to take primary responsibility for leading the digital transformation – that is, the CMO or CIO.

Regarding the Chief Marketing Officer – CMO, with the explosive growth of digital marketing over the past decade, understanding the power of digital channels like social media and advertising is a mandatory requirement for a CMO in the digital age. They are also the ones who are closest to the customers, understanding their needs even before they express them, and they know what is and could become a future trend. The marketing department is the focal point for online activities that interact with customers, most clearly demonstrating the company’s changes before and after digital transformation. However, the challenge for CMOs is that they can suffer from “occupational bias,” easily viewing digital transformation as a marketing or advertising direction, sometimes “hyping up” what the company has without a clear understanding of its underlying IT infrastructure or which parts of the business can be digitally transformed to optimize work (for example, while sales and marketing have customer and task management software, other departments like HR and recruitment also need digital transformation to optimize productivity). 

CIOs – Chief Information Officers also face similar issues. They may understand technology better than anyone (IT infrastructure, the technical team building software for digital transformation, or resolving requests during the transformation process – such as adding or improving features), but digital transformation is more related to business than IT. This means, as mentioned earlier, that businesses apply digital transformation to improve work quality and productivity, enabling employees to accomplish more, care for more customers, and serve them more dedicatedly in the same amount of time. Or in business, customers see that this company, this brand, offers better quality products that are more in line with public tastes. CIOs will have deep insight into information technology, but because their work environment does not involve direct contact with customers, they will lack a comprehensive view of the market.

So, the question that needs to be asked is, how can businesses find a “digital transformation” leader? It is agreed that based on the analysis above, at the very least, the leaders of the various departments (let’s call them CxOs) need to work together in unison to achieve results. But not every business is fortunate enough to have CxOs who truly understand their own field along with digital literacy. Because it’s not just about business or marketing in a normal environment; this is a digital environment that demands a higher level of difficulty. Without a dedicated person in charge, it’s very easy for a situation to arise where everyone goes in a different direction. At the very least, there will be no one to manage the digital transformation process (including progress, transformation costs, or taking responsibility and control when incidents occur) – because managers at all levels believe it is not their primary role and their own jobs are truly busy.

3. Digital Transformation: Who is the “Leader”?

Digital transformation is not just about marketing or technology; it’s about how people use technology and then apply it to business operations. Technology is the tool for digital transformation, and the data system is its foundation. Then, software like customer relationship management (CRM), human resource management (HRM), etc., will be selected based on criteria suitable for the business to serve business operations and streamline traditional manual workflows. From this, we can understand that CIOs and CMOs could potentially lead digital transformation due to their existing strengths. However, this would mean that CMOs and CIOs would take on roles different from their current jobs in their respective fields. It would be very difficult to combine “2 in 1.” If they are truly serious about digital transformation, large enterprises may need a Chief Digital Officer (CDO) – someone who synthesizes the necessary skills to lead the business through digital transformation. Because the scope of digital transformation’s impact covers all activities within the enterprise, this CDO must have a position equivalent to (and sometimes higher than) existing management levels like the CMO or CIO.

Don’t confuse a chief digital officer with an enterprise architecture consultant. Remember, digital transformation is a long-term process, not a one-time event. A business should not hire a consultant or an experienced advisor who will leave after the transformation process is completed. Meanwhile, the digital transformation process never stops; businesses must constantly update with global trends to devise strategies and make timely changes to respond to different waves. For example, at this moment it might be automation, but at another time, businesses might be pursuing automated robots. Furthermore, when a consultant or supervisor is brought in, it’s difficult for them to integrate with the company because people will psychologically view them as an outsider who has been hired.

So, what kind of person is a CDO and what is their role?

– Innovating everything at a higher level, from strategy, operations, and processes: When applying digital transformation to a business, business activities are expected to prosper, workflows become leaner and faster, thereby building effective and creative future strategies. Because if digital transformation wasn’t a “breath of fresh air” bringing positive changes to the business, it wouldn’t have become the inevitable trend it is today. The role of the CDO is to bring those positive changes to the enterprise.

– Mindset for allocation and business restructuring: It’s important to understand that with digital transformation, all jobs, processes, and actions are closely related. They are even set up as conditions; for example, you must complete 2 steps of process A to get to process B. If you skip a step, you cannot take a shortcut to process B. The company structure becomes seamless and logically unified at every step of its operations.

– Understanding and managing other areas such as IT, marketing, strategy, and finance: It can be said that a CDO is a multi-talented person because, at a minimum, to lead digital transformation, they need to understand the fields required for building it, such as technology, marketing, strategy development (possibly in collaboration with the CEO), and financial considerations. They are responsible for the budget spent on the enterprise’s digital transformation.

– Despite being so multi-talented, one person cannot do it all, so a CDO still needs leadership skills and charisma to unite all stakeholders to implement the transformation. From the CMO and CCO to the CIO, they know how to distill the necessary information for the digital transformation process from each field and synthesize it to serve the greater goal of enterprise digital transformation.

– Digital knowledge of e-commerce, transactions, marketing, media communications, and data systems: For a CDO, having knowledge of internal business areas like marketing, sales, and information technology is not enough. They must also have knowledge of factors related to the external environment, such as e-commerce, transactions, media communications, etc. This is because these are the common tools in the market for applying parts of digital transformation to the business. Simply put, the CDO must understand which automated messaging software customers currently prefer, what communication channels customers are interested in, and how the business’s digital transformation is demonstrated when operating on e-commerce platforms – a very popular sales channel. For example, automatically sending invoices via email with a digital signature, terms, etc.

In conclusion, the most suitable position for a digital transformation leader is a dedicated CDO – someone with a role equal to other CxOs in the enterprise, who can assist the CEO in managing the company’s digital transformation activities. Of course, the CEO’s role cannot be denied, as the CEO is the final decision-maker. The CEO represents the current strength of the business, while the CDO represents the future strength of the business. With the foundation and support of the CEO in guiding the company with its existing potential, a CDO can implement digital transformation most effectively. For small businesses, they may not need a separate CDO; in this case, the CEO is the most suitable person to steer the company ship on its digital transformation journey. To do this, they need to cultivate more professional and soft skills to lead the business in a new direction. The analysis above is from 1Office’s perspective. What about your opinion – who do you think should be the digital transformation leader? Share with 1Office!