July 14, 2023
Deborah Furey, SVP Enterprise Strategy & Consulting
Chief Data Officers (CDOs) seeking to drive impact early and ongoing will need to navigate known role challenges and build a platform to engage peers and leadership on the journey towards data-driven business. Specifically, today’s successful CDOs apply deep knowledge of industry - appropriate data science and strategic, data-led use cases to create solutions that drive impact. In our view, CDOs that recognize the role of change and can explain within data and analytics have the best opportunity to thrive.
Approximately 80% of F1000 have a Chief Data Officer (CDO) which is no surprise given the dramatic effect that data and analytics are having in all aspects of business and life. [i] This impact is further intensified by the surge in innovation driven by artificial intelligence, a phenomenon being experienced across multiple industries. According to recent research, “generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually" across most major functional use cases and industries. This estimate roughly doubles if the impact of embedding generative AI into software applications is also included.[ii]
It is surprising, however, that the CDO role has the shortest tenure of C-Suite - at just about 2 years - and likely driven by a number of key factors that CDOs must grapple with:
Evolving Role and Expectations: As this is a relatively new position in the C-suite, the expectations and scope of the CDO's role may not always be clearly defined or aligned with the organization's strategic objectives.
Organizational Challenges: Unlocking the impact of modern data strategies demand big changes in organizational culture, processes, and education. A top challenge for many companies is interpreting and understanding how to apply data assets/findings (e.g., analysis, reports)
Data Governance and Quality Issues: Data governance and quality issues are often complex and require collaboration across multiple departments and stakeholders.
Talent and Skill Gaps: Finding and retaining qualified data professionals with the necessary expertise can be challenging in today’s market and organizations may lack the data infrastructure, tools, and resources to support.
Limited Executive Support: If the CDO lacks executive support, they may face challenges in implementing their data strategies, securing adequate resources, and ultimately influencing strategic decision-making
Through our work with Fortune 1000 chief data officers across industries and functional areas, we see three core functions that CDO's must own and/or influence in order to drive modern data-driven strategies and operations:
Strategy – Chief Data Officers (CDOs) play a pivotal role in leading data integration across financial, business, and cultural domains, thereby driving and promoting data-centric transformation within the organization. A crucial part of their role involves collaborating with executives throughout the organization, evangelizing the incorporation of data and analytics into their respective business performances. CDOs also have the responsibility to mentor the analytics team on the necessary skills to drive a cultural shift in their interactions with internal stakeholders. Navigating these complexities, managing resistance to change, advocating for the "explainability" of data/analytics, and dismantling organizational silos are essential components of a CDO's role.
(Data) Science – The role of CDO is integral in both the practical and advanced utilization of data across all business aspects. This role traditionally involves evaluating, monitoring, governing, and optimizing data to propel business growth. However, we advocate for a CDO who also spearheads or significantly aids in advancing data science and AI capabilities, including the allocation of staff, resources, and tools. This ensures strides towards innovation, superior solution quality, and the capacity to drive substantial business impact. The hiring of exceptional professionals adept in all three dimensions - explainability DNA/caps, is also crucial. Additionally, the CDO should actively monitor emerging trends and potential competitive threats through data analytics and AI applications.
Solutions – CDOs are often tasked with supervising the application of data, analytics, and AI across the operational systems and services within an organization. Their role ensures that various functional areas - such as marketing, finance, product management, and supply chain - are effectively catered to by the data/analytics division. This includes managing data, overseeing governance, integrating operational platforms, and providing roadmap and analytics services to perpetually enhance operational insights and sophistication.
Most CDOs (~ 72%) come from technical or analytics background, which means they may need to complement their expertise with stakeholders across the organization in order to articulate and drive value in business terms. This means using core change management tools - active listening, communication, measurement and collaborative planning – to drive the foundations for the CDO role and agenda. It will also require securing strong relationships across business functions and leadership to ensure focus on high impact programs.
Three core actions CDO’s can take:
Prioritizing focus – Get behind corporate priorities - whether it is better visibility into performance metrics, streamlining logistics through machine learning or driving growth through marketing automation. Across the board, keep measuring progress and impact.
Fill in the Gaps – Understanding one’s own areas of expertise and skills can ensure that CDOs can fill the gaps to achieve data-driven impact – this may require development of steering committees, partner/advisors or internal tiger teams that complement and enhance performance.
Be the SME – Staying ahead of all the change and Ai/innovation trends is both daunting and exciting. CDO’s should find partners and resources to remain on top of trends and represent new ideas across the business as subject matter experts. Get started today through AI Demystified: A Business Leader's Guide to Understanding Artificial Intelligence.
We anticipate that the Chief Data Officer role will evolve over time – perhaps we will see multiple roles aligned with business functions and/or partnerships. We may also see new AI specific roles emerge within companies. Regardless, the critical need to use and understand the impact of data and analytics in complex organizations ensure that the CDO role will remain a strategic requirement for years to come. We will continue to explore this role with upcoming topics:
- The CDO’s role in driving an AI Agenda
- CDOs and Catalyzing Change
- CDO Archetypes – Where do you fit?
In summary, Chief Data Officers (CDOs) play a crucial role in leading data integration and advancing data science and AI capabilities. As AI continues to reshape industries, CDOs should focus on honing their change management skills and building strong relationships across the organization. This will ensure they are equipped to articulate and drive value in business terms, prioritizing high-impact programs that leverage data and AI for strategic advantage. If you are looking for support as you lead towards business transformation within your organization, please reach out.
[i] DataIQ. (n.d.). How to thrive as a chief dataofficer in 2023. DataIQ.https://www.dataiq.global/reports/how-to-thrive-as-a-chief-data-officer-in-2023
[ii]Chui, M., Hazan, E., Roberts, R., Singla, A., Samaja,K., Sukharevsky, A., Yee, L., & Zemmel, R. (2023, June 14). The economicpotential of Generative AI: The Next Productivity Frontier. McKinsey &Company.https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-ai-the-next-productivity-frontier