Just Adding a Chief Data Officer Isn’t Enough

The proliferation of C-suite roles is an indication of the increasing strategic and operational complexity organizations face. Heightened expectations of expertise are also part of the picture — for instance, GE’s recent transition from asking executives to focus on breadth to focus on depth.

One of the newest additions to the C-Suite is the Chief Data Officer. Thomas Redman wrote in October about the increasing value of a CDO and how to know whether such a role might be good for your organization. If you’ve decided to move ahead, then the next step is to effectively build that role into the rest of the top management team. To do so, you need clarity around how the CDO will work with the rest of the top management team as well as incentives that support collaboration across the top executives and senior managers — something that goes beyond equity compensation.

Research shows that you can’t just add a new member to a team without renegotiating the roles and relationships. Members need to know who already knows what, who should know what, and how to coordinate — and that all varies by the particular people in the team, not just their role. For instance, the person who was once the best at analytics may no longer hold that position if a Chief Data Officer is brought in. Brown, Court, and Willmott provide an excellent starter list for the issues to address: Establishing new mind-sets around the value of data; defining a data-analytics strategy; determining what to build, purchase, borrow, or rent; securing analytics expertise; mobilizing resources; and building frontline capabilities.

Brad Peters, CEO of Birst, a business intelligence company, raised the issue of incentives and structure with me in an interview at Saleforce.com’s Dreamforce conference. He said that without changes in incentives, as well as a change in the structure of the C-suite, broad-based roles like Chief Information Officers, Chief Marketing Officers, and Chief Data Officers are hampered in their effectiveness. Alignment with specific business goals is important to all senior executives, of course, but it’s especially true for those who may be in service roles to the business units of the organization.

David Aaker’s helps explain why in his book, Spanning Silos: The New CMO Imperative. Though he was writing about Chief Marketing Officers, his advice is equally valuable here. When incentives are focused on rewarding silo behavior and performance — as so many incentives are — it is a struggle to take advantage of a boundary-spanning executive position. Instead, organizations need cross-silo incentives and initiatives to support behaviors that leverage the skills of the new executive. (Chief Operating and Finance Officers side-step this issue given the broader power-base of their positions.)

The top management team should approach the role clarification and incentive alignment as a negotiation. While it is likely that the entire executive suite would be involved in a decision to bring in a Chief Data Officer, it is important that the process goes beyond involvement. Negotiation, with its norms of agreement to an explicit deal, means that the new role, its responsibilities, and its rewards, are fully integrated into those of the rest of the top management team.

Have this negotiation as part of the new Chief Data Officer on-boarding. Lay out major roles and responsibilities to highlight places where data and other roles intersect given the expertise of the particular people on the top management team. Use Brown, Court, and Willmott’s six tasks of data-focused activities to start developing the issues to have the on the table. Add incentives to the mix by setting goals around the collaborative activities. Morten Hansen argues that you don’t need to overhaul an entire incentive structure — you can focus on special incentives for silo-spanning collaborations.

The whole top management team must collaborate both in fact and incentives. There must be something that rewards cross-silo efforts. To effectively make use of data’s insights, executive teams need more than goodwill and a new hire.

From Data to Action An HBR Insight Center
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