Talking to a CDO? Think Like an Economist

The Chief Data Officer (CDO) role has evolved significantly over the past five to seven years. It has transitioned from a CIO Mini-me, focused on managing data infrastructure, to a business executive tasked with deriving value from the organisation’s data. Senior management now recognises the potential of data to optimise operations, mitigate risks, generate new revenue streams, and create a more compelling, differentiated customer experience. As a result, there is an increased demand for CDOs with economics training, highlighting the importance of an interdisciplinary approach to data management, advanced analytics, and business strategy.

Research shows that CDOs with economic backgrounds are increasingly successful[1]. Economics training equips CDOs with a robust framework for creating value and aligning data initiatives with organisational business and operational goals. These economics-equipped CDOs blend technical data expertise with strategic economic principles, enhancing their ability to interpret complex data and optimise operational decision-making. Their understanding of causal relationships and business implications further aligns data and AI strategies with broader organisational goals.

“The CDO Toolkit”

The original title for my book, “The Economics of Data, Analytics, and Digital Transformation,” was the “CDO Toolkit.” Given the CDO’s rapidly changing role and charter, I envisioned the book as a comprehensive resource to help CDOs navigate their evolving responsibilities. The CDO could use a toolkit to help them apply modern data economic concepts to unleash the value of their data by optimising or re-engineering key business processes, reducing operational and compliance risks, creating a more compelling and engaging customer experience, and driving data-driven innovation. This toolkit would equip CDOs with economic-based strategies and methodologies to manage and leverage data more effectively as a strategic business asset (Figure 1).

Organisations increasingly recognise the importance of leveraging data for a competitive edge. This has led to a growing requirement for Chief Data Officers (CDOs) who have a firm grasp of business and economic principles and the ability to “more effectively leverage data and analytics to power the organisation’s business and operational models” (Figure 2).

Let’s consider a situation where you need to interact with the Chief Data Officer (CDO) of a major theme park. Let’s explore how modern economic concepts can help facilitate a more relevant and meaningful discussion with the CDO.

Engaging a CDO:  Theme Parks Scenario

Leading theme parks concentrate intensively on guest experience, utilising sophisticated metrics to measure customer satisfaction and engagement. These metrics can encompass four core indicators: Safety, Courtesy, Show, and Efficiency, each contributing to exceptional service and memorable guest experiences.

To effectively engage the theme park’s CDO, aligning with the business and operational initiatives that the CDO is seeking to optimise is crucial. Start by thoroughly researching how data and analytics can enhance guest experiences in the abovementioned areas. Tools like the “Dean of Big Data” GPT can be invaluable in identifying, exploring, and understanding potential use cases (it’s free if you have ChatGPT4). This preparation will help you shape your conversation around initiatives to improve guest experiences, thus resonating with the CDO’s objectives and demonstrating your commitment to their key concerns. Table 1 lists some use cases that the “Dean of Big Data” GPT identified that might be relevant to the CDO conversation.

While the data and analytic technologies enabling these use cases are essential, the CDO will probably find the economic aspects of the data and analytics conversation even more compelling. Focusing on how to leverage data and analytics to create new sources of value for guests, the park, and individual attractions will better align with the CDO’s strategic goals. Highlighting the economic impact of data initiatives – such as increased revenue, improved operational efficiency, and enhanced guest satisfaction – can make your conversation more relevant, meaningful, and impactful.

Table 2 outlines how various economic data concepts can assist the CDO in unlocking the economic value of their data.

CDO: Thinking Like an Economist Summary

If you want to communicate effectively with the Chief Data Officer (CDO), it’s essential to understand that their role has evolved significantly. They are no longer just responsible for managing data systems; instead, they now focus on using data to create business, operational, and customer value. This shift means there is a growing demand for CDOs with a background in economics. Research shows that CDOs with expertise in economics are successful because they can combine their technical knowledge of data with strategic economic principles. This unique blend of skills allows them to lead their organisation in leveraging data and analytics to achieve better business and operational outcomes.

Originally published on Data Science Central on June 22, 2024. Republished here with permission of the author Bill Schmarzo.

Bill Schmarzo is a pragmatic leader with extensive experience in building and empowering Data Science and Value Engineering teams to unlock and monetise business value from data.

He created the Value Engineering methodology, which drives collaboration in identifying and prioritising key business use cases for data and analytics. Known as the “Dean of Big Data,” Bill specialises in data monetisation, integrating Design Thinking with Data Science to rapidly test and monetise insights.

An industry leader, Bill drives innovation, teaches the “Big Data MBA” course, and has authored four books and over 350 articles on Big Data, Data Science, and digital transformation.