Meet your ‘new’ digital boss – the CDO

In recent years, it has become increasingly common for large companies to assign the responsibility for their digital development to a CDO – a Chief Digital Officer. New research from Aarhus BSS at Aarhus University and University of Geneva outlines the prevalence and tasks of the CDO as well as the reasons a company might have for appointing one.

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By now, the list of top executives in large companies who have ‘Chief Officer’ in their title is long. Since titles such as Executive (CEO), Operating (COO) and Financial (CFO) Officer first took hold of the name plates in executive offices, the list of Chief Officers with more specific areas of responsibility has grown steadily. 

Chief Supply Chain Officer, Chief Information Officer, Chief Human Resource Officer, Chief Communications Officer and Chief Sustainability Officer are just a few examples of relatively new titles which have emerged in the last decades. A more recent one being Chief Digital Officer. 

To proclaim the CDO ‘new’ is perhaps a bit of a stretch. In a new study conducted by associate professor Sven Kunisch from the Department of Business Development and Technology at Aarhus BSS together with two other researchers, the phenomena is traced back to the year 2003 among large corporations in the United States, more specifically to the appointment of Mike Cooley as ‘Vice President – Digital’ in the firm Sprint Nextel. 

Substantial data 

Together with fellow researchers Markus Menz and Robert Langan from University of Geneva, Sven Kunisch has had an article accepted in the renowned scientific journal Long Range Planning. In this article, the researchers investigate the phenomenon of Chief Digital Officers. How prevalent is the job title, what does a CDO actually do, and what reasons do large companies have for appointing a CDO? These are some of the questions the researchers decided to explore. 

They based their study on data from the S&P 1500 Index (largest publicly listed firms in the United States) in the period 2000-2018. To analyse the management structure, financial status, market data and market position of these companies, the researchers also retrieved data from BoardEx (a global data and analysis company specialised in management positions and relations) and Standard & Poor’s global, financial database Compustat. In total, this resulted in analyses of 245,336 top executives across 2,339 companies as well as market data from 1,755 companies. 

“The largest Danish companies are at the forefront of digital development, as several previous studies have suggested.” 

Sven Kunisch, associate professor, Department of Business Development and Technology, Aarhus BSS  

While the first executives with the word ‘digital’ in their title emerged as early as the beginning of the 21st century, several years went by before the phenomenon became more widespread. In 2009, only 9 companies featured digital executives, but from 2010 and onwards, the number increased significantly. In 2018 – the last year included in the analysis – the number of CDOs had risen to 116, corresponding to approximately 5 per cent of all the BoardEx companies. And the surge predominantly happened during that particular year, which saw the addition of 22 new CDOs, a 25 per cent increase compared to the previous year. 

However, Sven Kunisch is reluctant to conclude that this is indicative of an ongoing trend, continuing in the years after 2018. 

“The trend could have peaked in 2018, and perhaps the role of the CDO have been incorporated into other Chief Officer positions since then. We cannot say for certain. We know that there was an increase, but the CDO title is still not very common today,” Sven Kunisch points out. 

Generalists versus specialists 

We do know that while the CDO title corresponded to 53 per cent of all digital executive titles between 2003 and 2010 (including titles such as ‘Vice President – Digital’ and similar), this number had increased to 87 per cent in 2018. According to the researchers, this suggests that the CDO position has become more important during this period and that the title has grown to play a substantial part in executive-level management. 

We also know that more than 28 per cent of CDOs have additional areas of responsibility, for instance marketing, innovation or technology. And we know that typically, they are located on the second or third level of executive hierarchy. 

To take a closer look at the role of the CDO across different companies, the researchers examined corporate press releases as well as individual job descriptions on social media. 

Yet, these analyses did not provide a clear picture of the job function of a CDO. On the one hand, there are generalists with a wide array of responsibilities within areas related to digitalisation. On the other hand, you have specialists with specific development tasks and responsibilities. In conclusion however, the study does find that generalists are more prevalent than specialists. 

CDOs complement CIOs 

In the third part of the study, the researchers explored a list of variables that might impact the decision to appoint a digital executive – a CDO, ‘Vice President – Digital’ or similar. These variables included the market position of a company, inclines or declines in sales growth, strategic management decisions, the composition of the management or the board, etc. 

In a surprising result of this analysis, it turns out that the presence of a CIO (Chief Information Officer) increases the likelihood that a company will fortify its digital management structure by appointing a CDO. In fact, the likelihood increases with as much as 59.3 per cent, and according to the researchers, this indicates that the CDO is far more often regarded as a supplement to a CIO than a substitution for one. 

The researchers also find that the size of a company has decisive influence on its decision to appoint a CDO, just like they observe a certain copy effect among companies within the same industry. 

CDOs in Denmark 

The CDO title has made its way to Denmark as well. Similarly to the United States, CDOs have entered the executive offices of large companies. 

Sven Kunisch produced a quick analysis of the presence of CDOs in Danish companies for Insights. The analysis shows that 4 out of the 13 largest Danish companies employ or have employed a CDO or ‘Vice President – Digital’ in the last five years. 

“This corresponds to just under 25 per cent, a higher proportion than the 5 per cent our study identified in American companies. Of course, you should be careful not to compare these results directly, but it does fit nicely with the general outlook that the largest Danish companies are at the forefront of digital development, as several previous studies have suggested,” says Sven Kunisch. 

Facts about the Study

Type of study: Empirical study, secondary data from databases, descriptive analysis. 

External collaborators: Markus Menz and Robert Langan, University of Geneva. 

External funding and conflict of interest: No 

Link to scientific article: Chief digital officers: An exploratory analysis of their emergence, nature, and determinants. Long Range Planning 

Contact information: Associate professor Sven Kunisch, Department of Business Development and Technology, Aarhus BSS.