In the previous article, A case for the CDO, I discussed the approach for determining if your company needs a CDO and if so, what is the best way to address alignment or positioning of the CDO organisation, at a high-level.
Getting the right set-up with a defined purpose and supportive positioning is critical for the success of the CDO and it warrants a detailed organisational design approach, just as any other function would require, to deliver the best intended outcomes.
‘Organizational Positioning’ refers to where the CDO org fits within the entire organisation. The decision should be based on the following four important considerations.
A. CDO Span of Control and Scope of Activities
B. Business function prominence in business value chain
C. C-level leader profile
D. Outreach effectiveness for success
Where and how the CDO organisation is created in any company should be a result of evaluation of the points above. Sometimes, changes may be needed as situations evolve. But if careful analysis is performed upfront, your CDO initiative would start strong with the early nurturing, and any subsequent changes would be an effect of general business/company evolution.
Even though CDOs are company executives with a ‘C’ in their title, they typically report to one of the first-line C-level executives. And I think that is the way it should be as, except in a few rare cases, the CDO role is not something that can effectively hold itself as a direct report to the CEO.
CDO is an important, game-changing function for the company, however, there is a degree of detail and mid-level influencing and consensus building that needs to happen in the CDO role, which will not be possible if the role is far removed from the layers where the decisions for data and analytics are made. Therefore, an effective CDO should be able to directly influence at least 3 organisational levels, up and down, including their own.
CDO is an important, game-changing function for the company, however, there is a degree of detail and mid-level influencing and consensus building that needs to happen...
A. CDO Span of Control and Scope of ActivitiesDepending on how the company is organised - a single entity, multiple entities across business lines rolling into a single corporation, a single company with global presence across continents/countries or multiple levels of aggregation creating more complex structures – CDO span of control and scope of activities will differ.
The higher the CDO org is in the company, the farther removed or limited it will be in execution for actual on-the-ground work for data engineering, governance, architecture, data quality and issue remediation.
In such cases, the span of control would be the actual responsibility for rolling out standardised policies, framework and procedures and maybe even support common tools. The scope of activities may be limited and the local CDO organisations would be executing much of the work.
There is no one approach that will work here, and the key is to do an informed analysis on company structure, interactions, degree of influence and autonomy of the corporate vs sub-entities while defining a firm-wide CDO set-up and roll-out.
Remember, the decisions should be based on what will work for effective management of data across the entire firm, including all sub-entities and it is ‘OK’ to differ in your approach between entities with regard to alignment, structure and coverage.
B. Business function prominence in business value chain: Who carries the weight around?It is very rare that all functions are equally important or equally loaded in any company. I agree that every function is required. But depending on the industry, complexity, market and nature of the business, some functions within the company are more critical in the value chain than the others. We will call this as driving-function. As such, the leverage they can achieve through effective data and analytics initiatives will be better than if the CDO was aligned somewhere else.
For example, in financial & banking sector, the primary driving functions are Risk Management, Finance, Marketing (Customer 360) and Technology. Data is at the core of everything that fuels the activities and output for these areas. Clean, reliable, timely and relevant data is non-negotiable, as well as high-standards related to the management of this data with adequate controls and governance. As a result, we usually find that the CDOs typically report to CRO, CFO, CMO or CIO.
Whereas in manufacturing, higher education, software, insurance or pharmaceutical sectors, it may make good business sense to evaluate alignment of the CDO function into C’s of alternate verticals (in addition to finance or technology) such as Plant Management, Academic Affairs, Product, Strategy & Innovation, Engineering, R&D, Actuary etc.
CDO is an evolving field and, based on the experience I have across 4 of the 6 sectors mentioned above, there are always more than one possible driving function in each of these sectors. The final decision on where the CDO should be positioned will be based on the company’s unique story along with the talent and capabilities available across the C-level, to support the function.
Note: CDO is a Business – Technology role and while the position/org stays within Business or Technology, the organisation must be staffed with people who can effectively bridge across the two sides. Also, if aligned under technology, the CDO should be a direct report to the CIO, as any other alignment would dilute the effectiveness of the organization or make it more of a technology-only initiative, that it isn’t.
C. C-level leader profileIn the previous article, A case for the CDO, I mentioned that the easiest and quickest way to ensure that the CDO initiative runs into the ground, is to align it with a C-level leader who does not understand the function (even at a high level), not value it, cannot see the strategic benefits of it or have conflicting interests.
These may be extreme words, but the intention is to ensure that the reader understands the criticality in avoiding the mistake of incorrect alignment when it comes to evaluating a C-level leader to whom the CDO will report to. This is as important as choosing the right candidate for being the CDO.
As I discussed in point B of this article – Business function prominence – there may be several candidate functions that are equally dependent on data being managed as an asset, and wanting to drive the CDO. However, not all leaders of those functions are inherently qualified to own the CDO. So what qualities do you look for and what should you avoid?
What to Embrace:
- Strategic thinker/true leader who fundamentally believes in the value of well-managed data and analytics.
- Visionary leader who can clearly provide support to CDO, to help garner visibility and acceptance of the CDO function, by effectively helping sell its value among their peers and with the CEO/Board.
- Leads by example, by willingly standing strong to correct the people, process, technology and control issues within their own function, by working with the CDO, before taking it to the rest of the company.
- A well-rounded executive who understands the inner workings of the company, broader challenges and opportunities, the various business functions and their inter-relationships.
- Weak leaders. Not everything is black & white and can be represented in numbers only. Most challenges faced by the CDO function are qualitative in nature, such as issues related to cultural/political aspects, job insecurities, conflicting priorities, resource contention and just the change involved in pushing something new that is company-wide. The C-level leader needs to be someone who has the humility, fortitude and capacity to understand the full picture when it is conveyed to them, and support the CDO in all ways to remove obstacles.
- Selfish leaders. CDO is a function that must operate across the company. As a result, whether it is under CIO, CFO or CRO, the function should operate across organisational boundaries. That implies the C-level leader is expected to think beyond their independent functions and always willing to have difficult conversations, if needed, to understand different perspectives.
- Unpopular leaders. Even at the top, there are a few leaders who are not very popular among their peers. If the function is lined up under such a leader, it will be extremely difficult for the CDO and the team to execute on the strategy as the cooperation from other areas can be expected to be sub-par.
- A leader with a different agenda. Though rare, this could be an issue, not just for CDO, but for any function under such a leader. Sometimes a C-level has a completely different agenda, either to better their own situation or brought in for a different purpose by the management. Whatever be the reason, it is difficult to establish a new function from the ground up under such a person, who in most cases can be attributed to a “bull in a china shop”. It is best to avoid positioning the CDO function under such a leadership as it will be a long time before any benefits are seen from the initiative.
D. Outreach effectiveness for success.If there is more than one area/leader that would be a good fit for the CDO organisation after evaluating the CDO positioning based on all the three points covered above, then that is a good problem. However, one function/leader combination would have a better outreach effectiveness and execution capabilities than the others would. Make that choice and there will be no regrets.
Disclaimer: All thoughts, ideas and opinions expressed in my articles are my own and do not reflect the views of my current / past employers or clients. No references or details will be provided in these articles that would expose any trade secrets or inner operations of any company whatsoever.
Other articles in this series:
0. The CDO Journey: A practitioner’s perspective
1. A case for the CDO
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