You May Not Need A CDO – But Wouldn’t You Want To Improve Your Odds Of Success
Gene Leganza and I just published a report on the role of the Chief Data Officer that we’re hearing so much about these days – Top Performers Appoint Chief Data Officers. To introduce the report, we sat down with our press team at Forrester to talk about the findings, and the implications for our clients.
Forrester PR: There's a ton of fantastic data in the report around the CDO. If you had to call out the most surprising finding, what would top your list?
Gene: No question it's the high correlation between high-performing companies and those with CDOs. Jennifer and I both feel that strong data capabilities are critical for organizations today and that the data agenda is quite complex and in need of strong leadership. That all means that it's quite logical to expect a correlation between strong data leadership and company performance – but given the relative newness of the CDO role it was surprising to see firm performance so closely linked to the role.
Of course, you can't infer cause and effect from correlation – the data could mean that execs in high-performing companies think having a CDO role is a good idea as much as it could mean CDOs are materially contributing to high performance. Either way that single statistic should make one take a serious look at the role in organizations without clear data leadership.
And you're right, there's a ton of fantastic data in this report – the next most surprising finding is just the rapid adoption of the role. Forty-five percent of organizations globally is a lot, and this was a particularly broad-based survey, with over 3,000 respondents.
Jennifer: One point I'd like to add is that we only spoke to those who had formally identified themselves as CDOs; similarly the quantitative research from Forrester's Business Technographics only covers those organizations with a formal CDO. But in the report, we try to tease out the functions that these roles are serving. That's the real key benefit. Having a CDO alone isn't enough but having a CDO (or someone) who performs the function of driving better data management and governance, raising the bar on analytics within the organization, and really evangelizing the importance of the insights generated – that’s what drives the transformation. Some organizations might have a CDO by another name, and they will also reap the benefits.
Forrester PR: While we don't specifically say most firms should consider hiring a CDO, the research points to the benefits of the role for non-digital native companies. What's the greatest risk for firms who don't possess data maturity in not hiring a CDO?
Gene: Clearly the risk for firms who don't possess data maturity is that without strong data leadership they're going to fall significantly behind their competition in being able to win, serve, and retain customers. There's absolutely no room for guesswork in understanding the customer and the customer experience anymore – there's data to tell you everything you need to know. If you don't have data competency you need to build it fast, and that's very difficult to do quickly and just impossible without strong leadership. It's complex and requires strong coordination between tech management and business domain experts.
Jennifer: As we mentioned in the report, some digital natives don't have CDOs. They already have the data capabilities, competencies and culture built into their DNA. And, many of these are the ones disrupting industries, with the incumbents chasing at their heels. Now add to these those incumbents who are really getting their data act together and developing a data culture. Those who don't make that effort now have two formidable camps to compete with. Having a CDO isn't a pre-requisite to success but in a data-driven world, where competitors glean actionable insights from their data, if you don't have the ability to do that you better think twice about how you plan to achieve your goals and eventually survive. The CDO role galvanizes an organization around the promise of data.
Forrester PR: From your research, is there currently a lot of tension among the CIO community when discussing the CDO-role? You say CIO's shouldn't feel threatened, but are there situations where CIO's are putting themselves at risk of being over-powered orpushed out by the CDO?
Gene: Actually, our research did not find this to be the case. We found that there were generally excellent levels of collaboration between the CDO and CIO functions, regardless of where the CDO reported in the organization. In many cases, the CIOs were only too painfully aware that they had too many things on their plates to give the data agenda the attention that it needed. They felt the firm needed a separate full-time role for data leadership, and the additional role meant that they could do a better job executing the CIO’s own agenda. That said, there are certainly dysfunctional organizations out there where a potentially conflicting new role will not improve things, but these are already broken organizations and a quick fix is the wrong approach anyway. And some firms were careful to design in some degree of data leadership without creating a CDO position because they knew they needed formal, dedicated data leadership but they didn't think a C-level role was right for them.
Jennifer: The perception of a turf battle is not surprising. Data has been the domain of the techies. But that is exactly what this role is trying to change. The democratization of data – both the responsibility for it and the insights from it – across the organization is the ultimate objective. That's what creating a data culture is about. Where we have seen tension – and yes, we did see some – is where the CIO isn't really stepping up. One government organization that I work with assigned a Chief Digital Officer to drive digital customer experience. That person later appointed someone to assess data maturity across the digital channels. The CIO then appointed a manager of business intelligence, and neither side is talking. The issue is clearly one of politics as the intention to improve data culture is clearly there.
Forrester PR: Based on the What It Means section, is it accurate to say that a CDO can actually consider himself successful if he ends up out of a job?
Gene: This is a controversial area – why name a Cxx position if it's not here for the long term? Our logic is that a sizable portion of organizations created the CDO role because their data management and data governance maturity was unacceptable. When the CDOs in these firms implement the appropriate structures and processes and get them firing on all cylinders – which will take a couple years – they'll no longer need a C-level role to keep the processes humming along. So successful CDOs may put themselves out of that job, but then they'll be able to focus on the strategic use of analytics to really understand their customers and that's where the gold is. So the job will morph in nature over time. None of the CDOs we spoke with were worried about having a job in the future.
Jennifer: Gene's right. The needs of the organization will evolve as the CDO accomplishes the initial mandate. In the report we define different focus areas for CDOs: the technology-focused CDO, the governance-focused CDO, the analytics-focused CDO and the cultural transformation CDO. The lines are blurry across these focus areas, and really all are needed. It's just a question of where they start and how the role evolves. A CDO who starts with a technology focus – to drive adaption of data tools and development data competencies – is successful if he eventually finds himself out of that job but then moves on to build out analytics competencies and create a broader data culture across the organization. The profile of the new CDO isn't the same as the traditional technology manager. The CIO could fill the functions of the new role but would need to demonstrate the skills we see in successful and long-lived CDOs, including the ability to build consensus, to motivate and drive change, and above all to evolve with the changing needs of the role.