Opinion: Companies hire chief data officers for the wrong reasons. Here’s a solution

Photo credit: Brandon Grasley.

When you’re a chief data officer (CDO), it’s clear that your primary job responsibility is to keep the company out of trouble. You are to stay on top of the evolving regulatory landscape and make sure that the company remains in compliance. You also need to make sure that there are no customer privacy mishaps. Unfortunately, this shortsighted mindset reflects a tremendous missed opportunity.

Here’s a scary statistic: Only 4 percent of companies said they have the right people, tools, data, and intent to draw meaningful insights from data  and to act on them. That’s according to a management survey by Bain & Company.

Something is seriously wrong.

Can you remember a conversation with a CMO over the past five years where data wasn’t on the agenda? Can you think of a single CEO who isn’t preoccupied with digital transformation and putting data at the center of the business? Even Cannes Lions , the international festival of creativity, has been dominated recently by talk of data. However, when you survey management as Bain & Company did, it’s clear that there is a stark disconnect between talk and reality.

It’s no wonder CDOs are so focused on compliance and governance. If you (the CEO) don’t understand something, the first thing you want to do is make sure it doesn’t destroy the company or cost you your job. And we’ve all read enough sensational headlines to know that when it comes to data, the stakes are high. Effective data governance and compliance with data privacy regulations are worthy of a C-level title and significant investment. We should look at these things through the lens of consumer trust and do them right. That’s the cost of doing business in a digital world.

Unfortunately, staying out of trouble is not a strategy for winning in the marketplace. Instead, companies are better served by viewing the CDO role as a strategic position with the potential to create vast differentiation for the business as a whole.

Creating a competitive advantage

Many people credit Steve Jobs and Jony Ive with turning Apple into the world’s most valuable company. But to me, it was Tim Cook’s decision to turn Apple’s supply chain into a competitive weapon that made the tech giant what it is today. Apple goes to tremendous lengths to ensure that it not only sources the raw materials it needs as efficiently as possible but also moves aggressively to gain preferential or exclusive access to the most essential materials and components.

One of Cook’s early decisions at Apple was to reserve US$100 million worth of holiday season air freight in order to ensure its products were delivered on time and to create havoc for the competition. When the company’s designers decided to add a green light indicator to the MacBook camera, they had to use a specialized laser to drill a tiny hole on the aluminum casing. Cook’s team cut an exclusive deal with the manufacturer of those lasers to ensure it supplied only Apple.

When it needs to, the company also spends to buy companies that are integral to its supply chain. It places electronic monitors in boxes of parts to prevent leakage and maintain secrecy. And by controlling the majority of its sales channels, it feeds real-time forecasts upstream in order to throttle supply at pace with demand. Apple is exceptional in the way it manages supply, but it is by no means alone in viewing its physical supply chain as a strategic differentiator.

Not every company makes physical products and needs a physical supply chain. But every company makes decisions. And the raw material of decisions is data. The data supply chain that powers the daily decisions made by managers and software requires every bit as much attention as a physical supply chain  (probably more).

When companies recruit CDOs, they should do so with the data supply chain in mind. And they should recruit CDOs who will bring the same competitive spirit to the management of the data supply chain as Cook did for Apple’s physical supply chain. A CDO whose primary orientation is toward creating a competitive advantage can generate vastly more shareholder value than one whose orientation is toward keeping the company out of trouble.

A data supply chain has four parts: supply, logistics, science, and execution. The CDO should be accountable for each part and judged on the basis of the competitive advantage that the end-to-end data supply chain provides for the company.

Data supply

Data logistics

Data science

Execution

Concluding thoughts