The CDO is dead, long live the CDO
Hierarchy appears to be the only option to pull a large group of individuals together toward a common goal. Many insects did it well before humans, but over the last 10,0000 years, humans have moved from decentralised clans into centralised nation-states consisting of hundreds of millions of people. From the pharaohs to Max Weber’s 20th bureaucratic management structure, we can now exist only in such a system because as a society or organisation grows beyond a few dozen people, the hierarchical pyramid is seen as the only option for the organisation. The justification is that it is nature and natural.
The “ideal organisation” was defined by Max Weber as a clear and strong hierarchy underpinned by the division of tasks based on specialisation. A fundamental assumption was that each unit takes care of one piece of the chain and the division of tasks within the unit is clearly defined, work can be executed much more efficiently. Weber envisioned this as a “superior structure” because it focused on rationality and equal treatment of all - assuming everyone was happy with their 1984 dystopian jobs and oversight. By formalising processes within organisations, but especially in government, favouritism and abuse of power could be prevented - as he assumed that those in charge and specialised workers remained. A really poor underlying assumption was that people act rationally, efficiently, and professionally. He also ignored the concept of shareholder primacy that would emerge. However, so strong is the argument that it remains the leading business philosophy today, and we still teach that hierarchy, administration and bureaucracy driven by efficiency and effective thinking underpinned by a better division of tasks and responsibilities to drive organisational performance measurable objective is still best practice. The justification is that it represents nature and is natural.
Different models emerged from the internet, web, and digital thinking allowing us to ponder if something better is possible. Small iterations, such as matrix management, never really changed the fundamentals and whilst embracing all stakeholders and ESG has added complexity to the decisions and models - hierarchy remains. However, it is possible to sense in the noise signals that “Data” is finally about to disrupt and dislodge a love/ hate affair with hierarchy, power, and control.
Counter to this and according to both scientists, individuals, including leaders, do not make their decisions after a thorough analysis, but first decide, unconsciously and intuitively, and then rationalise their decision. We have become experts in seeking out framed and biased data to justify and provide a rational argument for a decision we have already made.
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Endless inches have been written about structure, who and how to lead and what a digital organisation looks like. However, right now, we are likely to be in the death phase for a pure CDO (chief data/ digital officer) role as it becomes clear that the CTO, CIO and CDO roles have very similar mandates and are now actually competing for power, resources and a clear value to the organisation. The ridged ideals of separation and specialism models driving structures, management, incentives, KPI’s and hierarchy cannot work with the emergence of highly complex interdependency in a digital age - are we witnessing that the division of labour falls apart at scale because of complexity and speed?
For a complicated task, the separation of that task into modules, and components to create the scale of efficiency and effectiveness works, and it works really well. For any task where the output directly and immediately, because of close feedback loops, changes the inputs for the next unit of creation and consumption - the hierarchy fails. The ridged division of labour into separate tasks, modules, parts or components does not work - because it fundamentally needs repeatability.
When operating at speed and scale - but there is a high level of repeatability, hierarchy delivers, and we know its problems. However, data is enabling us to operate at speed, scale and uniqueness (non-repeatability) - this is different.
However, data is enabling us to operate at speed, scale and uniqueness (non-repeatability) - this is different.
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We have recognised for a while that leadership/ chief roles are actually a representation of the ontology of an organisation (structure), the question has never been if you need a CEO, CFO, CMO, CTO as these were clearly delineated roles and specialisms. We understand the roles, mandates, powers and delegated authority the experts and leaders bring and have.
In a digital business, we have created four roles CTO, CIO, CDO and CISO. But the reality is that the CMO and CDO need the CFO’s data. The CFO wants the COO and CMO’s data. The CIO has lots of data but no direct path to showing value. The CISO needs other data from outside the organisation and the CTO needs data the CMO has not yet imagined. Organisations opted to create new roles such as Chief Data or Digital Officer to address the emerging complexity and to avoid too much power being vested in the CTO.
Breaking the axis of old - the CEO/ CFO
The CEO/CFO axis has this framing; we’ll do more things that are cheaper in the short term and less of those that are more expensive in the long term as our incentive and remuneration guide us. In a company with unified incentives, there is a uniciation of framing which means it is difficult for new ideas to emerge. This incentive friction or incentive dependency means we always face the same decisions in the same way.
Many leaders are realising that data is forging changes, and this change is not about tech, data or analysis, but it is about whether we, the leadership, exec or board, are making the right decisions. Decisions of the past were framed by the ideal hierarchy underpinned by efficiency and effectiveness at scale driven by the demands for specialisation. However, to know we are making the right decision going forward, we need to understand we have the right choices today, which means we need all “data” and our data can no longer be about isolation, separation or specialisation.
I expect that we are about to see a new axis of power arrive with the emergence of a new chief role as we realise, we need a new power dynamic structure. A two-way axis (CEO/CFO) becomes a three-way stool. The emergence of the CEO/ CFO/ CxO. The CEO/ CFO will maintain the remits of controlling and understanding the speed and scale at which the hierarchy operates, with the new role focussing on uniqueness - how data breaks the old hierarchy. It does not matter what you call the X, the point is what is their mandate. They have to own:
the data philosophy
all data emerging from the company and its ecosystem
data governance and security
direct the current and future platform's abilities, functionality and performance
The point here is that this role is not about the analysis of the data but about ensuring the quality, attestation, providence, provenance, function, form, taxonomy, ontology and pedagogy of the data needed for decision and that we will continue to access to and enjoy the data we need to make better decisions.
The critical point is that once the CEO/CFO could know if they were making the right decisions as the framing they needed was about efficiency and effectiveness within a specialism model, however going forward, this axis is not only insufficient, it is damaging. This new third member is needed to provide modern-day stabilisation and governance to ensure that as an expanded team, “we know we are making the right decisions”, as we must regularly ask efficacy questions that were not needed under the old repeatability model, as the mission was sufficient as the guide.
The first victim will be the CDO, as it exists in a specialisation-driven hierarchy that has no choice but to change - not its structure and how it thinks.