A version of this article appeared in the Autumn 2017 issue of strategy+business.

A growing number of companies have embraced the need for strong digital leaders. Our 2016 study of chief digital officers (CDOs), which analyzed the presence of such leaders among the world’s 2,500 largest public companies, revealed that 19 percent of these companies have now designated an executive to lead their digital agenda. This number is up from just 6 percent of companies in our 2015 study. And the uptick has gained momentum in recent years: Sixty percent of the digital leaders we identified in our most recent study have been appointed since 2015.

Sixty percent of the digital leaders identified in our study have been appointed since 2015.

Such trends reflect the movement at many companies toward a state of more advanced digital competence. In our experience, it is typically at this stage that top management becomes focused on the need for digital leadership. In the early days of a business, different business units and corporate functions conduct scattershot experiments and pilot programs in hopes of kick-starting their digital efforts. But once a company decides to design a coherent, comprehensive strategy to capture the benefits of digitization, that decentralized approach will no longer suffice.

When it comes to implementing a digital strategy, the new class of CDOs often encounter several major obstacles upon assuming their role: ad hoc digital initiatives spread throughout a large organization, lacking central oversight; a traditional culture that resists change; a gap in the talent required; and legacy systems and structures that threaten to derail their ambitions. The right CDO for your company will have the background and experience to tackle these issues. The mix of requisite skills won’t look the same at every company, but will enable a CDO to lead your organization’s digital transformation, to the point at which fundamental changes in organization, governance, capabilities, business processes, underlying technology architecture, and culture take hold.

We use the title chief digital officer to refer to any executive tasked with putting into practice the digital ambition of his or her company or business unit. This could be a high-level member of the C-suite — a chief digital officer, chief technology officer, or chief information officer, among other roles. However, a company may instead have a vice president or director of digital operations leading the effort. Across industries, we see many of the latter positions represented: The percentage of CDOs who are members of the C-suite hasn’t changed significantly since 2015; it still hovers around 40 percent (see Exhibit 1).

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Other findings have also remained constant. Larger companies, for example, are still more likely to have a CDO in place, as are companies based in North America and Europe, and it's still true that most CDOs are men (84 percent in 2016). But there are some notable distinctions among today’s CDOs. Our 2015 study showed that consumer-facing industries such as communications, media, and entertainment; food and beverages; and transportation and travel were leading the way in appointing digital leaders, as they sought to improve their customer experiences, connectivity, and business models. Their leadership position has changed in this year’s study, as other industries — most notably insurance and banking — seek not only to boost their customer-facing activities but also to more fully digitize their internal operations (see Exhibit 2).

We’ve also seen a shift in the background of new digital leaders. In 2015, just 14 percent of CDOs had acquired their primary expertise in a technology field; in 2016, that proportion more than doubled, to 32 percent. Meanwhile, the percentage of CDOs with marketing, sales, and customer service backgrounds fell from 53 percent to 39 percent. And the percentage of technology-oriented CDOs in the C-suite is even higher — 41 percent, compared with 33 percent for marketing and sales CDOs.

These shifts correspond to the circumstances that companies are facing. For example, some companies may be looking to digitize only their customer-facing activities, or just one business unit at a time. The ideal CDO for them may have a great deal of sales or marketing experience in a particular industry, or expertise in a specific technical area. Other companies have greater ambitions for their transformation. Such companies will likely be looking for a digital leader whose background includes not just the customer-facing or operational aspects of digitization, but also experience in managing large-scale change. And now, as more companies reach digital maturity, they need CDOs who can navigate the intricacies of both legacy IT architectures and new digital applications. Getting there requires an executive with a strong background in technology as well as experience in addressing the often fraught political and governance issues involved in approving major technology investments and implementing the new systems.

The CDOs we interviewed for our study tended to have these qualities. Their experiences, their locations on the org chart, and even their specific missions varied. But they are facing similar challenges on their path to digital transformation.

Unify the Digital Agenda

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When a new digital leader assumes the role, there may be pockets of digital activity spread throughout the organization. This loose arrangement may work during the early stages of digital transformation, when experimentation is encouraged. But as the company begins to examine digital initiatives in light of a larger strategic goal, a lack of unity can quickly become problematic.

October 7, 2020

Overview

The concept of “work” is more fluid than ever: How we work, where we work and what we expect from work are in flux, and five different generations are working together. These dynamics present business leaders with complex challenges, made more acute by the ongoing impacts of the novel coronavirus (COVID-19) pandemic.

Chief among these challenges is adapting to a more remote and geographically dispersed workforce. Indeed, in a recent Aon pulse survey of more than 2,000 human resources leaders and professionals, 71 percentof respondents globally said their companies are actively investing in tools and technologies to support remote collaboration. This finding, among other data points in the survey, suggests remote working, staggered schedules and online meetings, all brought in to help control the pandemic and keep employees safe, are here to stay.

“A new era of workforce transformation is upon us, and it’s accelerated by COVID-19,” says John McLaughlin, chief commercial officer for Aon’s talent assessment practice. “To manage fundamental shifts of this nature, successful leaders need to think on the fly and focus on boosting the agility and resilience of their workforces.”

They’ll also need to be able to balance risk with innovation and adopt new methods to communicate with and coach employees across various work arrangements.

“When you put all of this together, one thing is very clear: The future leader is a digital leader,” says McLaughlin. “Digital leaders are characterized by the same fundamentals that all of us must have to succeed in the digital world: agility, curiosity and the drive to find new ways to do things better.”

In Depth

According to the Aon pulse survey, 84 percent of survey respondents globally view workforce agility — the ability to quickly move employees into new roles or areas of the organization to support changing business needs — as either very important or extremely important to the future success of their organizations. But there is some way to go: Only 39 percent of survey respondents view their workforces as very agile or extremely agile.

“This workforce agility gap — between what employees and teams can handle today versus what will be required of them in the near future — is significant and represents a major challenge for companies looking to reshape their business and human capital strategies,” said Pete Bentley, chief commercial officer for Aon’s Human Capital Solutions business. “This gap is remarkably consistent across regions and industries.”

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People leaders are vital to creating and facilitating this change. Today’s dynamic workplace calls for a new type of leadership.

THE DIGITAL LEADERSHIP MODEL

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“A high-quality leadership assessment model doesn’t just identify traits that are needed to lead right now — it looks for the timeless leadership traits that leaders will need to move their companies forward despite the volatile, complex and uncertain nature of today’s business climate,” says Tarandeep Singh, head of Assessment Solutions for Asia Pacific and Middle East at Aon. “Aon’s research narrows it down to three cornerstones: agile mindset, leading change and driving business.”

Those cornerstones are fueled by key behaviors, and the most successful leaders in this new era will demonstrate the following:

Model agility and flexibility: Guiding employees effectively and helping them thrive in the face of uncertainty will require leaders who can be flexible, embracing sudden change and adapting as needed. Successful leaders will be able to make the necessary changes and inspire confidence in employees that the next new course is the right one.

“Change has always been a constant,” says McLaughlin. “In the new workplace, leaders must not only cope with change but manage it. They must be resilient and help build resilience in their teams, supporting workers as they navigate changes and the evolution of their jobs.”

For leaders making decisions affecting their businesses and their employees, an essential skill will be the ability to make decisions with incomplete information, says McLaughlin.

Champion humility and collaboration: Successful leaders will recognize what they don’t know and rely on those around them to fill in any information gaps — and expect the same from their team members.

“As the speed of innovation and change increases, leaders will need to find the right balance between collaborative decision making, accepting input from others and the speed of decision making,” says McLaughlin.

Model diversity, equity and inclusion: According to a recent Aon pulse survey of human resources leaders, 86 percent of respondents globally said their ability to attract and retain diverse employees and create an inclusive culture was very important or extremely important to improve workforce agility.

“Creating an inclusive culture starts with leaders being willing to do the work of educating themselves and asking questions. What is it like to be someone other than me on my team? What actions can I take to increase the diversity on my team?” says Kelli Clark, vice president of global culture and change at Aon. “Leaders can then call upon their teams to do the same. At a basic level, it’s about creating equality of experience for everyone. And holding each other — peers, team members, leadership — accountable when we don’t live up to those values.”

Stay curious: “Digital leaders seek out and explore possibilities, whether that’s technology, products or market research. And they do it to find business opportunities, improve processes or simply to learn,” says McLaughlin.

One other important balancing act for effective leaders will be finding the right balance between risk and innovation.

“Successful leaders will look beyond their own organizations’ ecosystems and the current reality,” says McLaughlin. “They look at what customers value and go beyond that to consider how partners can collaborate to build a stronger customer offering.”

Coach — not manage — employees: Digital leaders will recognize the sometimes differing needs of remote workers and those in the office, as well as the challenges facing virtual teams. They’ll be open to using various tools and approaches to managing, communicating with and motivating employees, all while accommodating differences among them.

“This is the end of the ‘one-size-fits-all’ plan for developing employees,” McLaughlin says.

Ultimately, the successful leader will be more coach than manager, steering the team through challenges and helping guide the members of the team as they travel along their own career journeys, says McLaughlin.

CULTIVATING DIGITAL LEADERS

How do companies find, recruit and retain these digital leaders? One way of selecting external and internal candidates is through assessments focusing on the qualities of digital leadership.

“The data from personality assessment questionnaires can help identify which people are most able to change, which people can learn faster and better, which are more curious, and which are more agile or resilient.” McLaughlin says. “This information can help companies identify future leaders and change champions and build formal or informal centers of excellence.”

Businesses will also train employees to help them develop digital leadership skills.

“Companies getting this right are looking for talent everywhere internally and broadening the definition of potential,” says McLaughlin. “Current employees are enabled to learn and upskill on their own, creating a continuous cycle of digital-ready talent and, by extension, leaders. That is the future of talent development in a remote environment — organizations enabling career ownership and learning journeys to be owned by employees.”

McLaughlin says some of the workplace changes brought on by COVID-19 were actually ones many organizations had been considering as they imagined what their businesses might look like in the future. The pandemic has catapulted us forward by three to five years, he says.

“Change has rarely been more accessible for many organizations,” says McLaughlin. “Leaders with the right skills for this time will help their organizations make the right changes successfully, while helping their teams embrace those changes and succeed in the new environment.”

This document has been provided as an informational resource for Aon clients and business partners. It is intended to provide general guidance on potential exposures and is not intended to provide medical advice or address medical concerns or specific risk circumstances. Information given in this document is of a general nature, and Aon cannot be held liable for the guidance provided. We strongly encourage readers to seek additional safety, medical and epidemiological information from credible sources such as the World Health Organization. As regards insurance coverage questions, whether coverage applies or a policy will respond to any risk or circumstance is subject to the specific terms and conditions of the insurance policies and contracts at issue and the relevant underwriter determinations.

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