As data becomes an increasingly integral part of a company’s operations, more businesses are hiring chief data officers (CDOs) to help make sense of all their information. According to PwC’s 2021 Chief Data Officer Survey, 21% of the top 2,500 publicly traded companies have a CDO in place — which is twice as many as in 2019.
While putting CDOs in the C-suite is a positive step toward creating more data-driven organizations, just having these positions is not enough. Companies should also be able to trust that their data is accurate and that their CDOs are gathering the right data and are enabling access to the data and analytics that can help boost profits and growth.
Trust in data is becoming an increasingly fraught issue within companies, especially as they gather more information. Too many people still prefer trusting their gut to relying on data, and that’s making it harder for companies to derive much benefit from their analytics. It also makes it difficult for CDOs to do their jobs, with a Gartner survey finding that the average CDO tenure is two and a half years. The expectations on CDOs are strongly tied to business outcomes.
If companies are going to walk the walk on data, it’s time they start trusting their analytics — and their CDOs — to enable the kind of data-focused operation that every business now needs to be.
Why don’t companies trust their information? One reason is data and analytics have typically been seen as cost centers instead of something that can drive meaningful business outcomes. They’re thought of as risk mitigation tools rather than part of a profit-boosting strategy. At the same time, many companies often collect bad data — information that doesn’t apply to the business or wrong numbers that end up throwing off projections — or they don’t know how data works in the first place. It is not surprising to consider that most business leaders rose to their positions before modern data platforms and tools even existed, so they may need help understanding how they work and what data can do today.
Organizations that don’t trust their information tend to waste time debating the data itself rather than discussing what the analytics mean.
Often, these companies don’t have proper data governance structures in place, so they can’t know if a number is accurate or not; meetings involve multiple people sharing different data points that seem contradictory; leadership can also spend too many hours asking others to explain whether a data point is good or bad.
It’s a vastly different story among companies that trust their data. If they start off knowing the numbers are correct, they don’t need to spend time debating every fact and figure. Instead, executives are free to ask probing questions about specific issues. They can also start deriving important insights from that information, which could lead to new product launches or the creation of better business models. Companies can also start to predict trends and address them in real time. If they see that next quarter’s revenue will likely miss its target, then they can try and make adjustments to improve those numbers before it’s too late.
Clearly, trust allows companies to use their data far more efficiently and productively, yet getting executives and other employees to believe in their information can take a lot of effort. The CDO’s role is to make their company more data-literate by educating people on how analytics work and how to use their information effectively.
It’s not about turning everyone into a data engineer, but employees do need to be taught the basics.
For instance, people should understand the difference between correlation and causation, and know about confidence levels. They should also learn to interpret the data that matters to them and be provided with technological tools that can help. And, they should comprehend the kinds of external data and new data types that can create powerful competitive advantages.
It’s up to the CDO to help make certain that the data is correct, or if it’s not perfect, then at least know where gaps exist and account for any issues in the analytics. CDOs can do this by appointing data caretakers — people who watch data as it comes and look for any anomalous or strange behaviors. Using a set of key performance indicators, they’ll examine whether the numbers are within the right ranges and, if there’s a mistake, they’ll fix it.
The CDO should work towards adjusting the way people work with and talk about data, too. For instance, in the past, CEOs would be presented with data and then ask questions about what they’d been told. With real-time dashboards, executives can see data at the same time as everyone else. The head of sales should be prepared to walk into a meeting with an explanation of how they’re going to fix their sluggish sales, as the CEO will have already identified problems on their own.
Of course, none of this can happen overnight, but by educating employees on the importance of data, and by putting structures in place that can allow executives to feel confident about the information they’re receiving, that trust will come. Over time, the CDO’s job will get easier as the companies that don’t trust data will likely quickly start falling behind the ones that do.