CDOs Need To Change Their Firms, Then Change Jobs

If the chief data officer does their job right, they very quickly reach the point where they need to move up or out.

Guest Commentary, Guest Commentary

March 7, 2019

5 Min Read

The best chief data officers (CDOs) shouldn’t keep their jobs for more than two or three years. And that’s not because they don’t add value to their organizations.

A CDO’s most important job is identifying opportunities to monetize data across an enterprise, and then activate them. The good ones start adding value to their organizations fairly quickly, and turn traditional cost centers into lucrative profit centers in the first 100 days of their tenure.

Do these data opportunities go away after two or three years? Of course not.

So, why does the CDO need to go away?

I give that non-scientifically determined timeframe because of the CDO’s second most important job: moving their companies towards a mindset of optimizing data-driven insights to add value with its clients, and also to make more money.

Once the CDO creates that mindset, and builds out the channels for actuating it, the firm itself should have embodied the approach well enough that the CDO is no longer required. It’s then that the talented CDO, after transforming their organization, should probably transform themselves to an employee of another company.

How Is A CDO Different?

Before we discuss what a CDO should do, let’s clarify what the role is - specifically, how it’s different from the two roles it’s most often mistaken for with non-technical businesspeople -- a CTO or a CIO.

The CDO is, or should be, the head of sales of the firm’s digital product, and its chief innovation officer. The CDO's customers are the firm’s customers.

The CTO has no customers; he or she is (or should be) a true technological visionary, looking two years ahead to see where the technology is going. The CDO, on the other hand, is not focused at the edge of the technology but, rather, the edge of customer demand for digital products.

The “customers” of the CIO are the internal users of data. Most CIO organizations are cost centers with the mission to drive operational efficiency, compliance and security within the company. Their success is measured by proper cost control, and operational excellence.

An argument can be made that strong CIOs may evolve into business leaders, but they would need to develop customer success, sales and marketing skills, something that, most of the time, is not in their DNA, but something core to the skillset of the CDO.

What Does the CDO Do?

What is that skill-set, exactly? A CDO is a business leader, not a technology leader like a CTO or CIO. A CDO also carries a top-line, which he or she needs to deliver on through the monetization of digital assets.

In vertical focused businesses - say, manufacturing automobiles - the CDO essentially becomes a business unit separate from the others. If you’re selling into a horizontal - say, printers - then the CDO’s work is developing an overlay of monetizable insights based on usage of the product.

But what about a software business? In that case, the CDO is, or should be, the CEO.

The Critical Role of Analytics

Analytics is the platform that enables every company to activate and benefit quickly from a CDO. Indeed, they all manage some form of data, meaning they can all expand their focus into outcome selling by leveraging analytics and artificial intelligence towards incremental value for their customers and new revenue streams for their company.

Great CDO’s will create that analytics innovation platform and add a strong competitive advantage on their core market while expanding to adjacent markets.

As expectations grow from B2B customers (and also some B2C customers), to buy explicit ROI, it becomes crucial to add and augment every product and service with a solid set of analytics. This lets the customer monitor results and outcomes, as well as driving new behaviors using actionable insights.

Ultimately companies that leverage analytics, will outgrow and replace the ones that don’t.

The need for CDOs is becoming urgent. Companies are finally accepting the need for data and digital transformation of their businesses. According to Gartner, Digital initiatives topped the list of priorities for CIOs in 2019, with 33% of businesses now in the scaling or refining stages of digital maturity — up from 17% last year. (CIO Agenda 2019: Digital Maturity Reaches a Tipping Point).

Clearly, there’s a need for the CDO’s transformative skill-set. There was a need for it three years ago, also, but now, there’s a growing acknowledgement in business of both the necessity for change, and the lack of skills that exist in-house to tackle it.

Get Up or Get Out

Ultimately, once the CDO has achieved his mission to create a digital innovation platform that generates revenue and increases market shares, it is time for her to move on.

But, where does the CDO go?

The obvious choice is becoming the CEO of the newly digitally transformed company. That’s because they, more than anyone, understand the value proposition of each business unit, the outcomes generated to their customers, and the market dynamics. These former CDOs are also on the cutting edge of modernization, with a holistic horizontal perspective.

If they decide not to stay, that they move on, as those profiles are motivated by innovation, and should make it happen on a different industry or on a larger scale.

Either way, the role of the CDO is relatively short term. The need for the CDO, and the digital transformation that he or she brings, is now a permanent feature of business. Companies that embrace the CDO function can benefit greatly from new sources of revenues. Management at the ones that don’t need to get their houses in-order, or their resumes ready, as data becomes either an essential part of their product, or the product itself.

Charles Holive is managing director of the Strategy Consulting group at Sisense, a fast rising company in the analytics and business intelligence space. He previous headed up an AI-focused group in healthcare at GE.

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