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Why Every Growing Business Should Have a CDO By 2019, projections say, 90 percent of large businesses will employ chief data officers. Is yours among them? Here's what makes up a good CDO.

By Deren Baker

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


In business today, data is king. How it is sifted, mapped together, protected and analyzed in a process-oriented and scalable way can determine a company's success -- or lack thereof.

Related: Without Good Analysis, Big Data Is Just a Big Trash Dump

And, given that 47 percent of chief information officers already say their biggest challenge is dealing with the volume of data on their hands, the message here is clear: Companies need to ensure that they're moving in the right direction by bringing in a specialist dedicated to "all things data."

Enter the chief data officer, or CDO, who works hand in hand with his or her CIO to define the company's data strategy. "Data strategy," in turn, involves oversight of storage solutions, data science analysis, encryption and security issues, plus integrations between data sets and warehouses.

Some executives might ask why the CIO can't take on those duties himself (or herself). But, realistically, these tasks are too critical to be an afterthought to other responsibilities. Apparently, companies are recognizing this fact: Gartner estimates that 90 percent of large businesses will employ CDOs by 2019, the implication being that companies which neglect their data needs may soon find themselves scrambling to catch up.

The reasons companies need CDOs

Data helps with decision-making. Data, including customer data, lies at the heart of all digital companies. It helps companies determine what products to build, reveals customer habits, outlines where improvements are necessary and engenders trust between businesses and their consumers.

Certainly, gut feelings will always have a place in business, but data provides the next level of analysis, helping a company's executives determine whether their intuitions are founded in truth. Here's where a good CDO comes in: He or she will pore over the right information to help those executives make optimal decisions more quickly.

CDOs find patterns and connections. Finding patterns and connections within data is a tricky business, and less effective data scientists may get bogged down with the information. A good data scientist on the other hand will be able to analyze data's strategic utility.

Data has value for investors. Along with the patterns it reveals, data gives investors concrete figures upon which to base their backing decisions. Having a CDO on staff who understands the data you receive, and who can translate its meaning to investors, can be incredibly valuable, in terms of helping a company seek funding, and allowing its executives to spend more time focusing on the business' financial side.

Data about customers reveals more than customer opinions do. Customer opinions can be untrustworthy. Yet many businesses still rely on customer feedback instead of customer data, which means they're listening to their happy customers more than their angry ones. The patterns and trends that reflect actual customer behavior -- site usage, purchase history, transaction frequency, page visits, social connections, locations and more -- require objective analysis.

What customers say is often the opposite of what they do, frustrating business leaders when they don't understand why customers aren't buying what they said they wanted. In short, feedback helps, but it's not enough.

Data, then, supplies fuel for growth, and the top-performing companies tend to use data more effectively than do their peers. So, with so much on the line, why wouldn't companies want someone on staff whose sole responsibility is to ensure that their data strategy is working and fostering growth? And the next question: Once a company decides to hire a CDO, what are the qualities to look for?

Related: Mark Cuban on Why You Should Never Listen to Your Customers

1. A thorough understanding of tech stacks

While finding someone who understands the ins and outs of every possible data platform would be ideal, the chances of that are rare. Instead, look for someone who understands how to connect all the platforms needed to operate seamlessly. Stack connection can happen in many ways, but the best solution should be scalable as a business grows.

Whether it's understanding combinations of apps that can help manage data projects or making sure product designs are engaging customers according to data insights, good CDOs know how to interweave data into all aspects of the business.

2. The ability to think abstractly

While an engineering or science background is key, a good CDO must understand broader business concepts and how data applies to them. Seeing connections in individual data patterns is one thing, but it's entirely another to imagine connections between warehouses that will allow more complex connections between data.

For example, my company once collaborated with an airline that was convinced its frequent fliers were loyal to the brand, but data analysis disproved that. Instead, the airline's frequent fliers just happened to fly more than the average person and used many airlines.

The airline reacted, deciding to bolster its relationships with those fliers to woo even more of their business away from its competitors.

CDOs, then, must be equipped to look at the kind of data that resulted in the airline scenario, see where it fits into their company's big picture and make intelligent and beneficial decisions.

3. Strong interdepartmental communication skills

Because of the complexity of data connections and the diverse sets of interested parties, a good CDO must have exemplary communication, negotiation and relationship skills. As with any executive position, the CDO's job is as much about relationship building as it is expertise.

Perry Hewitt, who until April was Harvard's chief data officer -- and one of the first people to hold the CDO title in higher education -- recommends finding a digital team with backgrounds in various fields. The ability to think from multiple perspectives can be more valuable than expertise in only one specific area.

Related: Analyzing the Science of Customer Loyalty

A good CDO will set a foundation of efficiency so the company can spend more time acting on insights rather than piecing together the data puzzle. Bring a CDO into your boardroom to see how data can help your business grow.

Deren Baker

CEO, Jumpshot

Deren Baker is the CEO of Jumpshot, a San Francisco-based startup that offers marketing analytics software tailored for the travel, retail, media and e-commerce industries. He has previously held senior roles at Travelocity and Switchfly.

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