Data and AI Leadership Is More Important Than Ever for Business Success

The need for data and AI leadership is greater than ever. Data is one of the most important assets of any organization, yet companies continue to struggle with how best to organize and lead data, analytics, and AI for their company. Will the emergence and gradual adoption of generative AI (GenAI) capabilities alter this? Will GenAI transform industries in the same way that the internet did 25 years ago?

Together, over the past year, in publications including Harvard Business Review, we have written about the challenges that data and AI leaders – Chief Data Officers (CDO), Chief Data and Analytics Officers (CDAO), Chief Data, Analytics, and AI Officers (CDAIO) are facing. An annual survey of Fortune 1000 data leaders shows that while the data and AI leadership role has been widely adopted – 82.6% of leading companies have appointed a CDO/CDAO versus just 12% back in 2012 – just 40.5% report that the CDO/CDAO role is well understood within their companies, and only 35.5% say the role is successful and well-established within their firms.

As co-authors, we have been first-hand witnesses and participants in the rise and evolution of the CDAIO role. Randy has served as an advisor to companies on data leadership and has organized and moderated many CDO/CDAO roundtables and panels over the course of the past decade, in addition to counselling incumbents in these roles. Allison served as an industry CDO for five years, in addition to being an early pioneer and advocate for women data leaders and is currently advising CDAIOs and companies on how to deliver business value.

While we both agree that the CDO/CDAO role can feel impossible, we also believe the current iterations include the foundations for a better, more effective version of the job. We have asked the question of whether it is time for companies to reinvent the Chief Data Officer role, in light of demands for business value and the emergence of generative AI.

The first generation of Chief Data Officers were often hired into large companies in regulated industries such as healthcare and finance. Initially, the role was understood as a defensive one that focused on control and risk rather than a business one, even though both functions use the same data and analytical skills. CDO/CDAOs invested heavily in technology and people, building data infrastructures and teams of data engineers and data scientists, and governance infrastructures of people, policy, processes, and stewardship models in efforts to federate ownership of trust in data throughout the organization.

These efforts are complicated and often unpopular, and the benefits are difficult to quantify. Striking the right balance between too little or too much governance has been a challenge.

During the past decade, the CDO/CDAO has continued to evolve in its scope of focus and responsibilities. For 69.4% of companies, analytics is now part of the CDO/CDAO mandate. For many companies, responsibilities have shifted from “defensive” activities such as compliance and regulatory reporting, to “offensive” including revenue growth, business expansion, and customer acquisition for 61.8% of respondents. As data and AI have become increasingly central to business activities, the visibility of the role has increased. In the past, many CDO/CDAOs were reporting to the company’s Chief Information Officer (CIO). Today, 43.3% of CDO/CDAOs report to the President, CEO, or Chief Operating Officer of the company, and just 27.4% continue to report to the CIO.

Many companies are reassessing their needs and rethinking the CDO/CDAO role. Should it be a business role, rather than a technology role? Can one individual effectively manage and lead such a broad portfolio? Companies are now looking to ensure that business value is being delivered from data and AI investments. Recent bank failures have triggered new rounds of risk and regulatory requirements. The emergence of generative AI presents new opportunities for business transformation, as well as new privacy and ethics concerns.

At a time when many companies are taking a hard look at the CDO/ CDAO function, now is the time when data and AI leaders must step forward to show how they are contributing to the business value of the company. Successful data and AI leaders are critical partners to business leaders, who come to rely on them as right-hand lieutenants providing critical data and decision points that can drive successful business outcomes.

Delivering business value from AI will greatly depend upon the quality of data that is maintained and available for use. Companies that can leverage foundational investments in data management and cross-functional teams will be best positioned to make the most of AI opportunities. Those companies that have a clear vision for how they will deliver business value from their data and AI investments will be the companies that are most likely to prevail in the coming decade and beyond.

This article was featured in the first Edition of our Driven by Data Magazine. You can download the magazine and read more articles like this by clicking here.