Digital Transformation

Chief product officers move into the C-suite

CFOs are partnering with a new C-suite leader as organizations transform into digital-first businesses.
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· 4 min read

It’s been said so often that “every company is now a technology company,” that it’s easy to forget how disruptive that statement really is. It doesn’t matter if you are a sneaker manufacturer, trucking business, or fast food chain, digital products are now taking center stage. And for traditional brick-and-mortar companies, these new digital products—whether they’re mobile apps, virtual try-ons, inventory tracking systems, or voice-ordering systems—require new processes, KPIs, and accounting.

That’s where the chief product officer (CPO) comes in. As digital-first business models become increasingly important, CPOs are helping organizations create new products and align strategies with a company’s value proposition.

“Even five years ago, the role of the chief product officer was largely relegated to tech,” says Renee Niemi, CPO at Products That Count, a CPO resource platform. “In a very, very short period of time, the role is morphing to be very much the top business leader in the company.”

As digital transformation accelerates across the business world and organizations continue to move away from traditional business models, CFOs may find themselves increasingly working—and sharing responsibilities—with the CPO.

Partners in planning. When Jennifer Kaelin, CFO at digital product experience platform, helped her company hire a new CPO last year, she looked for someone who could guide strategic digital investments and forecast long-term growth, “somebody who could really work with the finance organization, the FP&A organization and the sales group on where we should be taking the product direction.”

For Kaelin, having an effective CPO who could clearly communicate the product roadmap against financial forecasts could help the company answer key strategic growth questions: “Where should we place our bets? What are our hypotheses? And how to make sure that we were investing in the right areas…how to be able to report on and align our products, then our R&D organization, against the ARR that we were driving from that.”

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Digital business models also need new financial metrics, especially for traditional firms pivoting to digital, according to Niemi. As more companies offer subscription models for their products, or expand their digital offerings, the finance chief needs a partner to help navigate the changes.

“You’re used to charging for your products and services in one way,” she said. “And so the way that the CFO used to account for that is just now fundamentally transitioning.”

New kid on the block. CPOs have long been an integral part of tech companies that predicate their business models on limited product lines—think Zoom’s video conferencing or Netflix’s streaming service—getting the product exactly right is the whole enchilada.

But as companies across a wide spectrum transition to a more digital-first business model, in which the products themselves create new sales, marketing, and customer retention opportunities, CPOs are starting to gain prominence at more traditional, non-tech companies. Real estate brokerage Anywhere Real Estate, logistics company CH Robinson, and DTC home decor company The Citizenry have all added CPOs to help them build digital roadmaps and scale products over the past two years.

The urgency to develop digital products, especially after Covid-19, is driving this shift for non-tech businesses, according to Niemi.

“Traditional businesses are in a very different place,” she says. “Because of the pandemic, a lot of them are now running to catch up on the digital front. Those that were ahead of the curve on the digital front had more success.”

Unique job descriptions. What a CPO does will vary by company and by industry. For more traditional sales-driven organizations, CPOs can help the transition to a more digital-facing business model, while for more “digital native” companies, CPOs can help create and guide growth according to Niemi.

“All these businesses are having to rethink the macro business model,” said Niemi, “The thought partner on that is your CPO.”—DA

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CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.