Article

D is for Retail

Digital transformation & CIO/CDO relationship

Whether the D stands for Digital, Disruption or Data, the role of Chief ‘D’ Officer (CDO) in Retail is distinct, developing, and devoted to anticipating the changing behaviour of customers in an increasingly complex online and physical world.

The CIO/CDO debate

CDOs have of course been around for a while now, and although the distinction between Chief Digital Officer and Chief Information Officer (CIO) is broadly understood, we find that many organisations are still struggling with the delineation of responsibilities between the two.

This is one of the concepts we explore in our new report, Organize for Digital — the CIO/CDO relationship. Our research indicates the CDO often has a business rather than technology background, and is focused purely on augmenting the customer’s digital experience. Leadership responsibilities centre on ensuring the DNA for innovation, digital and tech fluency is firmly and comprehensively embedded within the organisation. 

The CIO remains vital. They have an evolving role – often in conjunction with the CDO – making sure strategic and operational decisions take into account emerging considerations such as the Internet of Things and increased adoption of robotics. The CIO and CDO together ensure the selection, implementation and day-to-day use of appropriate technologies and related physical assets is optimal. They differ, however, in that the CIO maintains a focus on business operations, cost management and risk, whereas the CDO is more interested in opportunity, disruption and experimentation. 

Infusing digital DNA into Retail

Probably the biggest change in the retail environment in recent years has been the extent to which the digital experience is becoming the main event not the sideshow. Retailers are now expected to mature towards a new-style ‘business as usual’ – being digital as a progression from merely doing digital. This brings tremendous changes to ways of working, organisational culture and business leadership. The acuteness of the transformation needed varies between markets, but the global trend continues towards increasing omnichannel sales as a proportion of overall retail volumes and values. Indeed, many new small retailers are solely digital. 

In the UK, as a typical large retail market, online sales now account for 20–25% of overall retail sales by volume, and this proportion is rising year on year. So, the role for the Chief Digital Officer in particular is to understand what the customers of today and tomorrow expect from their online retail experience, and to push the retailers cross-functionally to deliver against it.

Making the right choice

Comparing the roles of CDO and CIO is not a binary exercise. What constitutes the right appointment for any given retailer will depend on its individual commercial environment and existing personnel. Some will regard the digital component of the CDO role as inspiring and destabilising; essential in shaping a new business model with a deep understanding of the customer at its core. Here, knowledge of the subtleties of retail will come from existing executives such as the CEO, or from catalytic talent imported from pure online retail businesses. 

Others will see the digitisation of retail as a step towards a more data-driven business in the longer run. Others still will incorporate digital, disruptive and data elements within a changing CIO function, but with input and expertise brought in for specific steps in the overall journey. 

The key is to have a clear strategy of how these responsibilities cohere, and to seek coaching and consulting support to see you through the transition. A huge challenge for the retailer of tomorrow will undoubtedly be to find a CXO who can fulfil both roles. 

Download the report

Our report, Organize for Digital — the CIO/CDO relationship, details the questions to ask and the choices to make when dividing responsibilities between the CIO and CDO. What’s more, it offers insights into how the roles evolve along with the digital transformation, and includes an analysis of CDO profiles. Critically, it also zooms in on what makes a good digital leader.

If you have any questions about the report, your digital transformation, or a retail issue in general, don’t hesitate to get in touch with one of the team below.