Objective and main results

This study investigates how Chief Digital Officers (CFOs) can pursue digital transformation (DT) activities in their organizations. It emphasizes the locus of responsibility for activities relating to DT and their organizational structuring, and the horizontal coordination mechanisms used by CDOs.

Main findings:

The authors find that the vertical and horizontal characteristics are closely intertwined, which enables CDOs to pursue DT activities.

• Once CDOs have been appointed, they need to be embedded in the organization by (vertically) anchoring them in the organization's structure, depending on the firm's DT strategy and the CDO's task focus.
  • An organization's DT strategy, its CDO's hierarchical position, and its CDO's task focus have to be aligned in order to digitally transform a company.
• CDOs combine different formal and informal activities to coordinate (horizontally) between employees working on DT activities in different units and at different hierarchical levels.

Summary of practical implications

Linking intra-organizational stakeholders is a key challenge for CDOs, since a DT affects multiple employees and results in interdependencies that require coordination. Use of horizontal coordination mechanisms is important to achieve cooperation and alignment across an organization.

• formal coordination mechanisms can support and accelerate the implementation of decisive DT activities throughout an organization.
• informal coordination mechanisms can help CDOs to generate ideas and to disseminate information in more voluntary settings.

Boards not only need to think about whether a new executive role needs to be established to support a DT, but they also need to provide a supportive context for CDOs once they are in office.

Boards should discuss relevant structural characteristics, the role of a company's DT strategy, and the CDO's required task focus. Boards who recruit candidates for CDO positions need to assess their prior experience with working with a centralized or decentralized DT strategy and whether they have demonstrated expertise in the specific required task focus (strategizing, innovating, or driving change).