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The Missing Innovation Framework for Chief Data Officers
Under modern data infrastructure constraints, CDOs and AI officers are being set up to fail. Here’s why cultural issues are standing in the way and what can be done to address them to maximize business capabilities.
5 Min Read
jozef sedmak via Alamy Stock
Over the past 30 years, the C-suite has expanded to include new roles focused on digital information, infrastructure, and security.
Once seen as niche roles, chief information officers (CIOs), chief security officers (CSOs) and chief privacy officers (CPOs) are now essential members of the C-suite at organizations of all sizes. The latest addition to this cohort is the chief data officer (CDO) -- an executive who is responsible for leading the charge on data strategy and analytics.
Companies are right to be turning to CDOs at a time when data is more central to business decision-making than ever. But only 17% of CDOs say they have the resources they need to drive change -- a factor that contributes to CDOs having the shortest average tenure of any C-suite executive.
This disconnect occurs because many organizations misunderstand the CDO role, viewing it as merely a center for governance and analytics. As a result, CDOs find themselves pigeonholed into functional roles as governance “hall monitors.”
But data governance and analytics are only two legs of a three-legged stool. The other -- and the most important -- is innovation. Most companies overlook the role CDOs can play in innovative product development because it’s difficult to quantify and uncomfortable to justify from a business perspective.
However, I’m here to tell you that CDOs can be your best ammunition for driving growth and change. Any incumbent organization looking for its advantage in the new era of platform economies needs to have data at the center of its strategy. Here’s a simple framework to help your organization (and your CDO) keep true data innovation at the top of the quarterly agenda.
An Operational Framework That Drives Growth
Most businesses, particularly technology companies, spend too much time trying to predict the future. As a result, they’re killing innovation in the cradle.
Here’s what I mean: Organizations often attempt to forecast future demand and design products aligned with that vision. For every product in the pipeline, leaders turn to complex profit-and-loss projections to determine whether they should actually build it.
After all, that’s how they successfully run their existing businesses. So why not study the most critical success factors of existing products, emulate those, and make them the foundation of a new line of business?
It’s logical, but it’s wrong. It’s a phenomenon I call “reverse causality.” When businesses look back over the history of a successful, groundbreaking product, they tell themselves a neat and tidy story about why it was successful. Then they expect to play out a similar script that’ll ensure their new product or business line will succeed.
But the reality behind the story was more complex than they recollect. Often businesses don’t really understand exactly what determined the success of past products. They just think they do. When they try to repeat past successes, they’re falsely associating an effect with a cause. That’s “reverse causality.”
The tragedy is, too many ideas get squashed at the inception stage because companies insist they need to know the outcome of an innovation before adopting it. And CDOs are getting caught up in this process by being asked to analyze historical data and provide insights into the future.
In practice, that means adding “analytics fortune teller” to their job descriptions on top of “data governance hall monitor.”
But predictive analytics can only tell you how to create a better, faster, more optimized version of a product that already exists. For true innovation, you need to break the mold -- and you need to empower your CDO to do the same.
Rather than taking a predictive approach to innovation, follow a non-linear path. See what you can create and then go build it. Not because it will be marginally profitable, but because it could change your business.
Ask yourself these three questions the next time you face a product decision:
Can I do it? Is building it possible? Does my team have the right knowledge, resources, and skills?
Should I do it? What do trusted advisors think of the idea? Out of all the projects I could prioritize, where does this one fit in?
How will I do it? What building blocks do I need? What are my plans for execution?
At a company operating under this framework, the CDO role transforms from a fortune teller predicting the future to a builder enabling the future.
This mindset gives the CDO latitude to:
Work autonomously alongside other executive leaders
Build for the future of data instead of reacting to regulations
Develop new revenue streams through data-driven innovation
By empowering your CDO to enact change, you can position the role as a catalyst for innovation in your company and disrupt the cycle of high turnover, ultimately resulting in improved outcomes and increased satisfaction for all stakeholders. Of course, CDOs must also embrace this operating mindset to thrive in today’s unpredictable business environment and avoid falling victim to the reverse causality trap.
Let Your CDO Be an Innovator
As an innovation leader, the CDO can steer your organization toward new horizons, exploring novel opportunities and ensuring that data is not merely a passive asset but a driving force behind strategic growth.
Industry incumbents often underestimate the advantage that their relationship to customers provides. To really capture the power and potency of the platform economy -- for themselves and their customers -- these incumbents need to adopt a new playbook, one that understands their demand side advantage.
So, can you empower CDOs to spearhead new innovations? Should you? The answer is “yes.”
How you do it is for you to determine.
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