Challenges Preventing CDOs from Maximizing Their Value in Organizations

Challenges Preventing CDOs from Maximizing Their Value in Organizations

?My previous article touched on why Chief Data Officers (CDOs) are increasingly crucial for organizations seeking to leverage data for competitive advantage in the AI era. Yet, many CDOs face significant challenges that prevent them from maximizing their value within organizations.

Aside from technical challenges such as managing data volume and complexity, there exist several other organizational hurdles that CDOs must navigate:

Employees – a key piece of company culture

It’s not uncommon for employees to feel threatened when data-centric methodologies are introduced, they could fear job displacement or losing influence. This is why it is critical to secure employee buy-in, taking time to understand employees’ concerns around adopting such technologies.

Research by Heidrick & Struggles has shown that companies that foster an environment where all voices are heard are 6x more likely to be innovative and agile, and 8x more likely to achieve business outcomes.

A local example is Mitsubishi Chemical who has implemented AI technologies in their factory production lines to monitor machine status in real time and detect abnormalities at an early stage. In addition, data analytics is used for product quality control and market analysis; enabling the company to respond quickly to customer needs, improve products and develop new products. Successful digital transformation was only possible as the organization introduced training programs to upskill employees, improving digital literacy and fostering a culture in which each and every employee can utilize digital technology to improve their work.

?Power without a place: The dilemma of an undefined role

Another challenge faced by CDOs is the lack of a clear definition of their role within longstanding corporate hierarchies. A survey by Wavestone found that the CDO role remains tenuous, with average tenures lasting less than 2.5 years.

The job continues to be not well understood by many, with another poll by Gartner this year revealing that despite 55% of organizations having established an AI board or committee, there's still significant uncertainty about who should be accountable for AI initiatives. This lack of clarity often results in overlapping responsibilities between CDOs, CIOs, and newly created AI-focused roles, further blurring the lines of authority and decision-making in data and AI governance.

Successful integration of CDOs requires a clear mandate from top leadership and well-defined relationships with other executive roles. This can be achieved by developing dynamic leader profiles that provide an objective view of a CDO's leadership potential, capabilities, and business impact. Such profiles would help organizations assess whether their current CDOs possess the necessary skills to meet the demands of the business and identify any gaps that need to be addressed.

When expectations mismatch

The third challenge met by CDOs is having to manage board expectations – organizations expect returns to a certain extent on their investments made into data-driven initiatives.

A 2024 survey of APAC leaders by HLB Global found that while 68% agree that emerging technologies like AI are key to driving business innovation, creativity, and productivity, they are also doubling down on initiatives to ‘bolster resilience’. For instance, 51% of APAC leaders are focused on reducing costs, while 67% want to improve operational efficiency.

This presents a challenge for the CDO to strike a balance between pioneering innovation and taking more pragmatic measures (i.e., being more prudent in spending). Overall, CDOs may face pressure to deliver quick wins at the expense of developing comprehensive, sustainable data strategies.

For CDOs to overcome resistance, they should aim to demonstrate early wins and communicate the long-term benefits of data-driven strategies effectively. For companies, they must commit to cultural change, ensure a clear definition of the CDO's role, and align expectations with the long-term nature of data transformation. Finally, looking to the future, companies should also prioritize securing a solid pipeline of capable leaders. Companies of the future will have a data-driven culture - and younger talent with fresh ideas, benefitting from training and mentorship programs will be key to a sustainable and successful transformation.

#CDO #ChieftDataOfficer #DigitalTransformation #Bigdata