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Do retailers need a chief data officer?
Organizations have instituted the position of chief data officer (CDO) over the last decade to help make some sense out of the flood of big data. Less than half of large companies have a CDO, however, and their average tenure is between two and two-and-a-half years, according to Gartner.
A recent Harvard Business Review analysis based on conversations with long-tenured CDOs identified reasons for the short tenures:
- Poorly-defined role: As in the early days of the CIO role, corporations are still trying to decide what they want from their CDOs. Newer titles, such as chief information security officer, chief privacy officers and chief analytics officer, are taking tasks initially reserved for CDOs.
- Old technology: Progress is being hindered by legacy systems and data environments as well as related costly upgrades.
- High expectations: CDOs are often held accountable for achieving transformational change within an 18-month period when a multi-year program is required. They are also often tasked with creating a data-driven culture that is a big ask given their technical background.
- ROI hurdles: Data-optimization improvement is hard to measure and CDOs frequently lack the business savvy to sell their progress.
- Poaching: The high-demand CDO can easily find another employer.
Suggestions to help the CDO succeed include linking advanced analytics to business strategies and goals. Strong c-level sponsorship is critical.
The authors of the Harvard Business Review article, led by Thomas Davenport, a professor of IT and Management at Babson College, argue that managing data is “not the same and need different management approaches” versus managing technology, the realm of the CIO/CTO.
Gartner’s “2021 CDO Survey” showed that if senior D&A (data and analytics) leaders are in charge or heavily involved, the organization is more likely to outperform on innovation and more likely to be highly effective in producing business value. Andrew White, a Gartner analyst, said in a statement, “If you want a data-driven culture where data and analytics drive how you excel at decision making, you need a CDO.”
In an article in MIT Sloan Management Review, Randy Bean, CEO of NewVantage Partners, said, “The establishment of the chief data officer role represents a recognition that data matters to the organization.”
- Gartner Survey Finds 72% of Data & Analytics Leaders Are Leading or Heavily Involved in Digital Transformation Initiatives – Gartner
- Do You Need a Chief Data Officer? – Gartner
- Why Do Chief Data Officers Have Such Short Tenures? – Harvard Business Review
- Why Chief Data Officers Must Assume Leadership for Data Success – MIT Sloan Management Review
- Survey of 500+ Data Professionals Reveals Large Gap in the Data Supply Chain Demand for Data Is Growing, But So Are DataOps Challenges – Immuta/Business Wire
- Where does the chief digital officer fit into retail’s executive team? – RetailWire
- The rise of the chief artificial intelligence officer – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you see a strong need for a chief data officer for retailers and brands in addition to the CIO/CTO? How would you define the role and best position it for success?
Poll
Loading …BrainTrust
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Joe Skorupa
Influencer, Consultant and Strategic Advisor
There is a clear distinction between a CIO/CTO’s work vs. the imperative for a chief data officer (CDO). Today’s insights-driven, digital-first operating models require the CDO to have a seat in the C-suite, along with a dedicated team focusing on leveraging powerful data and analytics to drive an outstanding customer-first experience.
The CIO typically supports the systems, technical architecture, data flows, and operational capabilities to run the company. The CDO’s team is driving capabilities to empower, enable, and support the business team with valuable analytics and insights. Those insights could then, in turn, be leveraged to drive increased levels of personalization and localization strategies, along with bridging any divides between the digital and physical shopping experiences.
If a company is serious about being data-led vs. data-driven, then absolutely yes, as the CMO needs a partner on this.
The need is clear for all the reasons stated in the summary by Tom. Another overarching reason is that retailers are monetizing their data. In many cases, they are making more money from their data than retailing. When all the other issues are added on to this, there is no doubt that retailers need to step up their game in this area.
I think having a chief data officer is equivalent to using the word omnichannel. These are older concepts that existed before the prevalence of data woven into everything and retail being everywhere. I think it’s antiquated and it shouldn’t be a position.
In today’s world, a chief data officer or head of data and analytics is absolutely necessary. The data corporations are now collecting is extremely vast and complex, and someone needs to ensure every division is correctly leveraging what’s relevant. Organizations run the risk of becoming too intuition-driven or unbalanced in decision-making without a dedicated person advocating for the use of all that’s being collected.
I see the CDO as being someone who keeps an organization committed to strategic data collection, analysis, and use, and an enforcer of research-driven moves.
What you need is not a CDO but a good CIO who has a clear understanding of retail and digital transformation. Someone who can build and lead a strong team and someone who can explain complex matters in a comprehensive language for non IT experts.
Well, sure, as long as retailers also have a chief “gut” officer. You know, the Malcolm Gladwell “Blink” idea — someone with 10,000 hours of experience (especially with customers) who can call BS on some of what the “data” says. There’s been an over-reliance on numbers this century and it shows in terms of product creativity, keeping up with tech and in-store experience. Sometimes, as many of you know, you just have to “feel” it’s the right thing to do and go for it.
A unique individual, indeed.
Having a chief data officer is rapidly becoming an imperative since data is the king of all commodities that can drive long-term retailer success. The role can help set strategy and pull together disparate parts of the organization to help implement data-driven decision making that creates value for the entire organization. Analytics and insights based on consumer and other data sets should be a specialized focus that is separate from a CIT or CTO role. More and more organizations are also looking to monetize data they have through retail media subsidiaries or by selling consumer data as well.
I am not a tech or digital guy, so I view this through the lens of a data user. A merchant who uses data to learn from the past and present and project into the future. A merchant who bridges and fuses the design and planning aspects of the business. If there are product merchants, can there be data “merchants”? It’s one thing to gather and assemble the data. Who teaches the rest of the organization what data is available and how to use it? How does data bust out of the data silo and get deployed and used within the organization? I have a feeling there is a lot of data sitting on the shelf somewhere and is being underutilized. How can a CDO create the best ROI from all the data percolating up from the business?
Jeff I love your comments. Data is not the end state, but a tool to make good decisions. The CDataO (there are chief digital and chief diversity officers as well) needs to be the one who converts data into a decision making tool that drives ROI at all levels of the organization.
Do companies need a CDO? The short answer is YES with one modification in the title to reflect the importance of analytics. The role should be responsible for both data and analytics, therefore, chief data and analytics officer (CD&AO). Data is the most valuable asset in enterprises today. In 2020 the world created, consumed, distributed, and copied approximately 64 Zettabytes of data and in 3.5 years from now – that’s 2025 – it will triple to 180 Zettabytes. What’s a Zettabyte you ask? It’s a trillion gigabytes! Hard to get your mind wrapped around that, eh? The scale is mind-numbing. It’s one of many reasons why the CD&AO is so important, and priority #1 should be to educate and transition the company into a “data-driven” enterprise. It won’t be good enough for companies to be data aware or data led — no, companies must be data-driven. And if the CD&AO doesn’t do his/her job correctly, I can almost assure you that a company becomes ripe for disruption by a smaller, faster, more agile data-driven company.
The idea of adding another member to the C-suite strikes me as adding one more silo to the decision making process. The function of providing evolving data for the balance of the organization is complex. Data must be related to the need — is it operations? Is it marketing? Is it logistics?
If a company does establish a CDO, that person should be next in line for the CEO job. To be successful, this person must be a real systems thinker, understanding all the aspects of company operations and needs. There are few of us that can do that. The real data needs of a company and the priorities are so diverse that the CDO is in a position to prioritize the functions of the company, which is counter to good strategic implementation.
I see this only adding to conflict and wasted resources.
I’m right with you Gene. The problem is that we have a 19th century org chart paradigm that just doesn’t address the realities of the 21st century corporation.
Since both of these roles are relatively new in our retail history, there often is overlap and lack of clarity between the CIO and CDO roles. I would view the chief data officer as a crucial position since nearly every decision made by a brand or retailer comes from data driven insights. Employee hiring, product selection, store location, website UX, even what tech investments to make are all informed and shaped by the data available. And with the growing complexity of myriad channels, platforms and partnerships, gathering and sharing disparate data is going to be the key driver of profit for a company.
One of the most misused phrases in business is, “we’re data-driven.” Not that data should not be the basis of decisions; it’s just that data alone is insufficient. Equating data with facts misses the art and science of interpretation and the necessary understanding of context. Data is about making better decisions; if you have bad data and don’t know it, expect catastrophic outcomes. Ditto If you have good data, but you don’t trust it. Robust decision-making requires credible data.
So do retailers need a chief data officer? With the amount of data that a retailer has and the hidden insights within, retailers would be amiss to ignore that role. The real challenge is infusing agility around speed into the organization so retailers can take advantage of the higher confidence and insights generated. Don’t think of a CDO as a silver bullet; the first stop is your organizational culture.
Yes, retailers should be all-in on data analytics and, ideally, data visualization. But the title “CDO” is a tricky one. In many firms, it stands for “chief digital officer” and carries the mission of digital transformation. Whatever you call the person, there should be someone whose responsibility centers on real-time data usage and decision making in order to keep up with the changes and challenges of multichannel retailing. The companies with the best data are the winners in this game and I wholeheartedly support the role — but maybe a less confusing acronym.
The need for a discrete position such as CDO depends in how the industry defines the position. TLAs (three-letter acronyms) don’t mean much if the definition is not uniform across all business. One could argue that the CDO is, or could be, the CMO (marketing, not merchandise) and could have the data officer reporting to him or her. It is not clear to me that this should be a C-suite position. Too many “Chiefs…”
The need for a company to leverage and possibly monetize data is indisputable. I have some concern for how lopsided some organizations can become. Chief customer officer, chief revenue officer, CIO, CMO, CISO, chief commerce officer, COO, CEO, chief human resource officer, chief change officer, and lastly if budget still permits – a sales associate.
The need for the role has been evolving for the last 15 years, and continues to grow in importance. For retailers that capture customer data, this information is one of the retailers’ most valuable and complex assets. Overlaying customer data with the increasingly complex set of merchandise data (attributes and supply chain visibility) has been a growing challenge for retailers. Combining these two sets with the rapidly evolving omnichannel fulfillment/delivery experience offers tremendous opportunities for cost savings and increased sales if the data is managed correctly. I’m not sure it needs to be a “C” level position. However the role clearly needs to be a leadership position in the IT organization.
In addition to being responsible for maintaining the integrity of the data the position should also be responsible for the delivery and definition of the data and key reporting definitions. Almost every retailer has multiple reporting platforms and teams that should be rationalized under this role. There are also dozens of other data points that should fall under the purview of this position including planograms, traffic counting, HR data, scheduling and WFM data, and dozens of similar applications with data.
The answer is “yes, maybe.” I believe we need to rethink the entire C-suite. Technology used to be something the geeks and nerds fixed, now it is critical that all senior leadership understand its potential, limits, and applications. Does a company need a CIO, CTO, and CDO? Today, maybe. Tomorrow, I’m not so sure. I think that before we begin to define a role for CDO we first need to look at how data flows – or should flow – in an organization and whether the entire senior org chart needs to be reimagined.
Absoutely! Any larger retailer (this includes QSR) must cultivate first party assets and such data needs management from three perspectives (in no particular order): 1) how to leverage for CRM-based marketing and advertising to your own customers (this will exhibit five times the ROAS; 2) how to manage privacy; 3) how to leverage assets into ad tech services.
This is 50 percent margin stuff and Amazon is now #3 in ad revenues approaching $20 billion. Walmart is moving in that direction, although late to the party. Target is doing this via Rondel. Marketing based on naturally occurring first-party assets is essential for anyone who wants to be best in class.
Yes to the question about a strong need for the position. Both Walmart and Target have chief data officers, which makes a strong case for the position. Target is particularly interesting because it heavily invested in its data capabilities to create 10 different billion-dollar in-house brands, something I believe no other retailer has done.
I’d prefer they start with a CISO (Chief Information Security Officer), and that the person work for the CIO. I just don’t see a need for more fragmentation, as Gene pointed out.
This is a very big topic. Retailers need to leverage their data (both customer and supply chain) more than ever due to changes in behavior and supply chain. These leaders need to make more decisions faster and those decisions have greater ramifications.
To achieve those business results, retailers need to put in place a strong data leader, whose role will be focused on ensuring the necessary data and analytics are available for the leaders in a timely fashion. The role should include data standardization, putting in place data governance, designing and building on a consistent data platform, ensuring metric consistency and building out self-service analytics.
Finally this role must be the advocate for data-driven behavior within the company as the internal data evangelist, and support the work with a strong ROI measurement. A very full job indeed!
In addition to? No … perhaps instead of. The question, though, seems like backward thinking (not that companies don’t do it): the first question should always be “what, if any, unmet needs do we have and how can they be satisfied?” not “should we have a CDO?”
Managing a retailer’s technology stack and getting insights from its consumer data are two distinct needs requiring unique and different skill sets. While the technology may be a conduit for gathering and managing data, that’s where the overlap starts and ends. For a CDO to be successful, the role must span departments — from sales to marketing and finance to technology — and be seen as one that empowers the digital-first thinking required for success across the brand. The role must have the budget, authority and resources needed to bring together departmental silos. And, it must empower these organizations by building data analytics skills across them that can help find meaningful insights and put them into action.
Having a high-level data position is important within any company. Does it need to be a C-Level position? I’m not so sure. Probably more appropriate under the CTO/CIO within larger organizations. I agree that there needs to be clear expectations for gauging the success of the position. Strong partnerships with marketing and analytics will ultimately be necessary to create a successful program.
Retailers don’t need another “C” level executive. Data/Analytics/Insights should be embedded in every business decision and day to day activities of the retailer. Rather than creating a new role, retailers need to enable their existing workforce with the right tools and mindset to leverage the data.