Don’t Hire A Chief Data Officer Unless You’re Serious About Becoming A Data-Driven Company

There’s a lot of discussion in the business world right now about chief data officers (CDOs). It’s centered primarily around two questions: When should a business hire a CDO? And, What should this person do?

No organization should seriously consider hiring a new C-level executive without fully understanding the strategic purpose of that role. Yet that’s exactly where many companies are today: They have come to realize that data is a critical business asset, and they’re not managing it effectively. They are desperate to have someone swoop in, take control of everything data-related and make it all better.

This approach is wrongheaded. The CDO should not be expected to assume the entire “data problem” for an organization. If you think differently, you’re not ready to hire a CDO.

How will you know if you are ready? When your business is prepared to execute a formal big-data strategy and is fully committed to start building a data-driven culture — two critical steps toward becoming a data-driven enterprise.

A Different Type Of CDO

Data-driven enterprises are businesses that have a cultural mindset to use data analytics to make fact-based business decisions. More than that, they have the ability to quickly gather the right data from the right parts of the business to make those decisions. The CDO is central to making that happen.

A CDO’s core mission is to help transform the business into a data-driven company.

The CDO role is still very new, as is the concept of the data-driven enterprise. It is therefore not surprising that many organizations have trouble defining the CDO’s role, and are unsure when to add this position to their C-suite. However, despite this uncertainty, the population of CDOs is steadily expanding. Gartner predicts that 25 percent of organizations will have a CDO by 2017.

Now, what type of CDO these businesses will have is another question entirely. My team is already encountering many “flavors” of the CDO role in the business community. Some examples:

  • The Regulatory Compliance-Focused CDO, who helps define the company’s information management strategy to meet compliance demands; reports to the chief risk officer (CRO)
  • The Analytics CDO, who is responsible for hiring data scientists and helping to solve big-data problems; typically reports to the chief information officer (CIO)
  • The Data-Quality/Governance/Policy CDO, who is usually hired to be the “chief fixer of broken data;” reports to the chief executive officer (CEO)
  • The​ Revenue-Generator CDO, who is responsible for building out data monetization models; reports to the chief marketing officer (CMO)

None of these CDO roles are suitable for the data-driven enterprise, however. The “Data-Driven Enterprise CDO” is different — something much more.

Aligning The Sun, Moon, Stars And Data

A CDO’s core mission is to help transform the business into a data-driven company. To achieve that objective, a CDO should ideally have a combination of technical skills, marketing expertise and business acumen that will enable them to see the “big picture” on big data, and elevate the importance of data to the top of the organization. This person needs to be both a strategist and a change agent. And, of course, a CDO must know how to manage and protect data like the critical business asset it is.

In a data-driven enterprise, the CDO is essentially the “Chief Coordinator of Data.” The CDO is responsible for helping the business and management align the sun, moon and stars of people, processes and technology so that the business can do new and transformative things with its data.​

The CDO should never be “siloed,” like a CDO who looks at data only from a compliance perspective. And the CDO is not a “fixer,” although this person can certainly help provide direction on how to make improvements that will allow the business to create value from data. The CDO understands how the organization can use data analytics to solve business problems — from how to grow market share to reducing fraud to mitigating cybersecurity risks.

Most importantly, the CDO does not work alone. Other C-level executives — including the CEO — must also be at the table, helping the organization use its data strategically. Where the CDO adds particular value is in helping different departments and divisions work together more effectively around data-driven projects, and laying the groundwork for management to engage in fact-based decision-making.

The CDO for a data-­driven enterprise is many things. But mostly, the CDO must be a visionary who can see the far-reaching potential of data, as well as its practical applications today. ​

The time to hire a CDO is after you’ve embarked on a journey to become a data-driven enterprise and have decided you need the right person in place to drive and execute your big-data strategy.