Digital units – savior of innovation?

In recent years digital business units and subsidiaries have been booming across industries to set up organizations for the digital future: the aims of the new units are widespread, from development of new digital business models to building up of digital expertise, application of new working models and enforcement of external collaboration. But in order to create longterm benefits, the digital units need to interact effectively with existing functions and business, which will often have conflicting interests and working principles.

CDO and CIO – the wild one versus the brakeman

A prime example of conflicting interests is the roles of Chief Digital Officer, typically head of the digital unit, and Chief Information Officer head of the IT department.

The CIO, with the aspiration to be a reliable business partner and  nnovation driver, is typically responsible for efficient operations. His organization requires deep business understanding and strong IT know-how, and ensures efficiency and resiliently running systems. The CIO organization ensures the  evenues of today.

The CDO, on the other hand, typically has the ambition to create the new revenue sources of the future, sometimes even in competition with the core business, and drive digital transformation in the company. His organization follows new organizational principles to achieve high speed. The nature of this role often implies only temporary existence of new organizational designs, in order to reintegrate or sell businesses or functions in the long term.

Both roles have different ambitions on several topics, leading to multiple areas of potential conflict: responsibily for IT, the role of IT in digitalization, interaction with business units, degrees of freedom and data-sharing policies are just a  few.

While this conflict can often be perceived as hindering both units in their core tasks, it does not need to be eliminated by definition. Instead, constant balancing of targets and activities is required.