The Role of the CDO and Data-Driven Decision-Making
Translated from Russian with the help of AI. Original: Russian version
The role of the Chief Data Officer (CDO) is growing, and more decisions are being made on the basis of data, as the examples of Netflix, Zara and professional sport show. I urge companies to start building data offices now.
The role of the CDO in organizations is growing every year, and more and more decisions are being made on the basis of data. Having data does not mean an organization makes data-driven decisions. That requires a huge process of collecting data daily, structuring it properly and analyzing it continuously. This is a great deal of work, and it requires the right structure and a CDO. We are all gradually getting used to Power BI and the dashboards we use to make decisions, but even that is not yet data-driven decision-making. Business analytics implies deeper analysis using a variety of methods, from the Monte Carlo method to difference-in-differences (Dif&Dif) and optimization models.
Consider how each of us rates films after watching them on Netflix, or music after listening to it on Spotify. This is done so that, using the KNN method, the platforms can identify our preferences and then proactively recommend a particular film or piece of music. Sometimes we are surprised that big companies guess my preferences so well. It is simple analytics based on big data. Anyone can walk into any Zara store and be surprised to find that the product range differs from store to store: there is overlap, but the differences are considerable. I checked this by comparing the Zara stores in Dostyk Plaza and Mega. We rarely think about it, but Zara's ordering decisions are based on data from previous years and the assessment of the store supervisor. If a certain item sells better than the rest, the system will keep ordering it again and again, even though demand differs from location to location, even within a single city.
Many of us have seen the film Moneyball, which tells the true story of how a general manager used big data to build a team without spending much money and win a championship. Today sport without big data simply does not exist. All the big clubs use big data in huge volumes to make decisions, and athletes are covered in sensors during live play, which makes it possible to make decisions during the game itself.
That is why the role of the CDO grows every year and will keep growing. In the future it will be extremely difficult to win in competition on a manager's feelings and intuition, and only data-driven organizations will survive. Start building CDO offices in your companies now, or it will be too late.