By the end of next year, Gartner estimates that 90 percent of large companies will have a Chief Data Officer in place, yet there’s still little clarity around what exactly the role entails. What should CDOs be doing to effectively drive results? Surprisingly, the answer has little to do with the data itself.
The chief data officer is a powerful position. Sitting at the intersection of business and IT, the CDO understands the imperatives of the business and how data can be used to achieve them. More than a third of CDOs now have profit and loss responsibility, and they are uniquely positioned not just to drive profitability but also to identify and activate new lines of business.
To understand the role, it’s helpful to contrast it with that of the CTO and the CIO. These positions have traditionally been focused on infrastructure, privacy, and security. They’re essential areas, and companies that focus on them may never suffer an outage or a breach -- but they may also find themselves out of business in 10 years. These days, no one can afford to ignore data.
The CTO and the CIO have also traditionally leaned towards centralization. To keep costs down, they choose applications and services that will be used broadly across the organization. This centralized approach also makes governance and security easier to manage.
The CDO, by contrast, must serve the unique needs of each business unit. Of course, the chief data officer should try to maximise use of shared systems and resources, but their focus is to address the priorities of each line of business (LOB), while ensuring they’re broadly aligned with the business overall.
Here are the main roles a chief data officer needs to fill, outside of the traditional security and infrastructure tasks, to help their organization succeed with data. Some large companies have an office of the CDO with several staff, which means these responsibilities can be shared across the team.
Perhaps the most important task is evangelizing the power of data to an audience that may not understand its potential or may be resistant to change. That requires engaging with all constituents in the company to ensure they understand the value data can bring, and to get their buy-in to support data initiatives. These constituents include:
- The C Suite. The executive team must be on board to support projects and help drive change through the company
- LOBs. Business leaders need to feel confident that you understand their objectives and that they will play a role in data projects -- not have their power usurped
- IT teams. They can be your biggest obstacle, because they may feel they have the most to lose and the least to gain. Show them how a solid data strategy will help to improve information governance and security, and will make them an ally for LOBs instead of an adversary, which has historically seemed the case
- End users. These are your customers, and they need to be on board with the benefits of data initiatives to ensure engagement and positive results
Evangelism isn’t a one-way communication; it involves meeting with people, hearing their concerns and crafting a plan together. Getting key influencers on board within each constituency will also be a big help.
Providing a Center of Excellence
Big data analytics is a new and fast-moving area, and the CDO should be a resource who can educate the company about the opportunities data presents and how to capitalize on them. That means having a good grasp of what’s happening in their industry, including the ways competitors and peers are using data to get ahead. They are also the internal experts, which means they have a working knowledge of technologies like machine learning and where they should be applied, and how data scientists and data analysts can best work together. Working with the business units, they also help identify ways new ways to leverage data to support the business, including new revenue opportunities.
Driving cultural change
A static culture creates inertia; organizations tend to do things the same way they always have because it’s easy. Even with the right technologies, people won’t maximise data use until they see its value and form new habits. The CDO needs to drive those habits and promote a culture of data-driven decision making.
Former Netscape President Jim Barksdale is famous for saying, “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” That’s a maxim to live by, and the CDO should encourage all employees to back up their recommendations with data. Senior leaders can also help here: At company meetings, they should share the data behind company decisions. These are all ways to promote a data-first way of thinking.
Cultures are often deeply ingrained, and the CDO must lead the efforts to break with the past.
These are the three key roles for the CDO in the enterprise, but there are at least two other important tasks that fall under their purview. If done successfully, they will make your lives easier.
Measuring impact. Underlying all data initiatives is a desire to improve results, and measurement is key to knowing the success and validity of programs. One way is to look at business results, based on objectives laid out with the LOBs. Is revenue up? Customer acquisition? NPS scores? The other side of impact is employee engagement: are new data tools being used? Measurement will help you win support from business leaders and provide proof points for future initiatives.
Structuring data teams. Every business will have its own optimal structure, but there are best practices to follow. More than half of CDOs now report directly to the CEO, CTO or another C-Suite member, reflecting the strategic importance of data and the authority required to effect meaningful change. The CDO serves in an advisory role to LOB leaders -- but ultimately needs to the power to enforce that advice with backing from the C-Suite.
Data analysts and data scientists in most cases will report to the CDO. Data scientists should be a shared resource who work with LOB leaders on an as-needed basis. Data analysts are most effective when embedded within the lines of business, where they’re close to end users and the problems they need to solve.
Again, every organization is different, so you need to find a structure that works best based on your objectives and available talent.
McKinsey & Co. says the range of applications and opportunities for data is growing and will continue to expand, and a chief data officer is an invaluable resource for corralling participants and getting these efforts in motion. It’s a new but exciting role, and if you follow the above advice you will play a critical part in shaping a successful, data-driven future for your company.