We live in an era where data has become a significant asset for organizations. Also, at the same time, the amount of data available is at its highest levels. According to the NewVantage Partners' survey covering data executives who served in executive data leadership positions with 116 diverse Fortune 1000 and leading organizations during 2022, 93% of organizations said they plan to increase their data investments in 2023. And 83% had already hired a Chief Data Officer (CDO) or Chief Data and Analytics Officer (CDAO). However, the lack of understanding of the value created by CDOs is still manifested in multiple ways; tenures are short, the expectations placed on the CDO's role are highly variable and diffused, etc.
How can CDOs then create value and make the created value visible in the organization?
Take ownership of data and AI. A recent survey of 250 CDOs found that 35% believe focusing on a small set of key analytics or artificial intelligence (AI) projects can deliver the most value. And it's not just about focusing on the technology – the majority of CDOs (64%) are also spending their time on enabling new business initiatives based on data, analytics, or AI. By managing both the supply of and demand for data, these CDOs are finding effective ways to provide value to their organizations.
Center your focus on a few key projects that bring value to stakeholders. If your organization is in the early stages of the data and analytics journey, it's best to start small. Choose a few key analytics, and AI use cases based on consultations with key stakeholders and focus on successfully deploying those projects. This way, you can make the connection between data modernization and the business value it provides visible.
Concentrate on data products. Data products combine data and analytics to achieve a specified conclusion for customers, employees, or stakeholders. By focusing on data products, the use of data and analytics are utilized throughout the process, from ideation to deployment and ongoing development. This approach also ensures that data scientists, data engineers, and other members of a data product team collaborate in deploying entire business-critical applications.
Measure and document results understandably and transparently. Sometimes it is hard for nontechnical executives and other experts in the organization to recognize the results of data and analytics. So, to make the results concrete, illustrate and communicate them clearly.
Find the business leaders and businesses that already understand the importance of data. The Gartners' research from 2022 shows that the most important barriers to the success of CDOs' work are talent shortages (45%), cultural challenges to accept change (40%), and lack of resources and funding (32%). These all are somehow attached to understanding the CDO's value at the highest levels of organizations. As in all recruitments, the cumulative return on investment will show in the long term, which needs top executives' trust.
Strategies for sophisticated organizations
These five strategies presented above are for CDOs working in various kinds of organizations, despite the maturity level of data and analytics. But what if those strategies are already covered? Advanced companies are adopting new approaches and strategies to maximize the value of their data. While traditional methods of providing value still apply, advanced companies leverage their sophisticated data capabilities to gain even more insight and drive better outcomes. These strategies to be presented are for CDOs working in already more advanced organizations.
Data governance – CDO's priority which is not that easy to fulfill. The survey research shows that data governance is one of the top priorities of CDOs. However, it is a challenging way to achieve value. The tricky part of data governance is that it requires a culture that values data and the willingness of experts who do not work with data on their day-to-day to take data management activities as a part of their job. It requires a culture that emphasizes openness rather than protectiveness.
Creating a data-driven culture will show the returns of investments in the long term. The need for data-driven culture is a commonly understood challenge, and the need for this type of culture is a barrier to the successful implementation of data and analytics. The change requires improvements in data literacy, data-driven decision-making attempts, and investments in cultural activities.
In sophisticated organizations, build scalable analytics and data infrastructure solutions. When talking about organizations with higher maturity levels, CDOs' work is not just about completing individual projects – it's about building a robust analytics and data infrastructure that can accelerate the use of data, analytics, and AI across the entire organization. The goal is to create an infrastructure that enables reliable and scalable data usage across the organization and its different functions.
The paradox: how to make the demand and requirements meet?
According to Gartners' latest annual research for 2022, CDOs' tenures have increased compared to 2021, implying that CDOs' value has become more visible and understood. On the other hand, the NewVantage Partners' survey shows that the role of CDO is still quite unclear; only 40,5% answered that the role is well-understood in their company. Undoubtedly, this shortage of understanding is the logical reason behind the challenges, such as short tenures and variable expectations. Only a little over one-third reported that they successfully established the CDO function in their organization.
The need for data-driven decision-making and data-based business activities is huge, but the expectations do not align with the resources and the state of the business's maturity. As with any other position, CDO's success requires leadership, suitable culture, and the requirements to succeed in the role. CDO is not a recruit-and-collect-the-rewards type of deal.
This article is based on an article co-authored by Dr. Richard Wang, Director of the MIT Chief Data Officer and Information Quality Program and Chairperson of the Annual MIT CDOIQ Symposium. The CDOIQ Symposium annually brings CDOs and data leaders together to the MIT campus in Cambridge, Massachusetts, USA.
We are happy to announce that the first-ever CDOIQ Nordic Symposium will be held on February 6, 2024, at Aalto University in Espoo, Finland. Dr. Wang will be one of the main speakers at the Nordic Symposium. Read more
The original article "8 Strategies for Chief Data Officers to Create — and Demonstrate — Value" was published in Harvard Business Review Digital in January 2023. The article is authored by Thomas H. Davenport, Richard Y. Wang, and Priyanka Tiwari. Read the article here.