I’ve been writing about the rise of the Chief Data Officer as the latest ‘C-level’ executive that most companies will need to manage the mountains of operations data.
Now, Wells Fargo Bank, the world’s largest bank, recently announced the appointment of its first-ever CDO. A. Charles Thomas is the former chief data and analytics officer for the insurance giant USAA. He will report to the Bank’s Chief Information Officer.
I applaud Wells Fargo’s decision. It’s not surprising – West coasters have long known that Wells Fargo has always been a visionary technology corporation, with a Silicon Valley pedigree that dates all the way back to the years after WWII, when David Packard, after being turned down by other banks, was given a line of credit with Wells Fargo on just a handshake.
Although I don’t know Mr. Thomas, I did take note of Wells Fargo’s decision about where to position him as the CDO within the corporate org chart. As I’ve noted before in this column, I believe that companies – and CDO’s – are best served when they report to the business side of the company and not to IT. But I am always looking for new ways to approach this market and its inhabitants. If I have learned one thing over the years, it is that no two companies are alike when it comes to solving these challenges and so I will be watching to see how a company of Wells Fargo’s size and stature manage their analytical waters. I do believe that the Chief Data Officer’s job is to convert information into actionable items for company operations, not to manage and control that information.
In recent years I have watched the creation of whole new departments to manage giant caches of data but more often than not, this is seen as a threat to the IT department. CIOs often heavily lobby – sometimes even demand – for the new CDO role to be placed under their purview so that it can be controlled and kept from becoming a renegade, even competitive center for data and the value it holds. But I still contend that this isn’t the best approach.
If you are wondering if this might be what happened at Wells Fargo, I’m going to assume not, largely because of the bank’s technologically progressive reputation. Rather, I believe that Wells Fargo’s CIO is a visionary, actually believes in the concept of the ‘Data Driven Organization’ and is getting out ahead of the trend by driving the hiring of Mr. Thomas. He has seen the future, and rather than fight it, has rightly chosen to embrace it.
His timing couldn’t be better. The Chief Data Officer is no longer a theoretical exercise. In some companies, the CDO is now an established part of the organization. A recent Gartner Group report found 100 CDOs in American industry – double the number from 2012. Meanwhile, a total of 550 companies – including global giants like Samsung, HSBC and Citigroup– said they were looking into the creation of such a position.
What they understand is what Wells Fargo has already figured out: whether you call the job ‘Chief Data Officer’ or not, the time has now come to do this. Someone in your organization needs to be in charge of the data that drives your company, someone who can capture, crunch and analyze that data to find those hidden, but hugely valuable, chunks of knowledge that will make you more competitive, more efficient and more attractive to your customers. If you have hesitated doing this, or still have some doubt, look at the great companies that have now made the move ahead of you. Soon that list will include your smartest competitors.
Now, and in the years to come, being a data-driven company will be fundamental to your strategy. And so the decision about who gets to own that data will be one of the most important that you make. And this means you need to make that decision – and not have it made for you. If you don’t decide the CDO will report to the CIO by default. Is that what you want? Or should it go under the Chief Marketing Officer? If you think this is a minor, even arbitrary, decision made by whomever shouts the loudest, you will be making a serious mistake. The choice of which department wins this internal fight may determine how successful your company will be in the years ahead.
Given the stakes, the CEO should be the person making this decision. And he or she should do so with the advice and the support of the Board of Directors – this is one job description and hiring decision that the Board should not accept as a fait accompli. If the CDO role turns into just Data Warehouse 2.0, another redundant department in IT, they will have made a dangerous mistake, costly in both overhead and even more in opportunity cost.
Most CEOs have a limited knowledge about the world of data analytics. Most, if they are lucky, only encounter the results of these analytics via reports, or better, a dashboard program on company operations. Here are some of the requirements any CEO should be looking for when defining (and possibly hiring) the role of a CDO:
The CDO needs a solid business background to understand how business runs. He or she can’t just be a data scientist, though the CDO may have data scientists working for him/her.
- The CDO must have the leeway to work with other organizations inside the company.
- He or she should have visibility and access to the rest of the C-suite.
- Ideally this person should be compensated on business results, not assets managed. Many people think that the more databases you have, the better, when better should mean the ability to get more value out of the databases you have.
- The CDO must have specific performance improvement targets. These goals should not have punitive penalties, but should be sufficiently demanding and even experimental that you expect a certain number of failures.
- The CDO must be sufficiently empowered to pursue and achieve these goals.
This is a good start. And if actually followed the question of who the CDO should report to will inevitably emerge. . . and be answered for your organization.
This article originally appeared in Forbes on May 8, 2014.