Two former CAOs Make a Compelling Case for the CAO to Report to the CEO to build out an AI and Data Science Accountability COE.
Anthony Branda, MBA, Ph.D., Kevin Kramer, Ph.D.
CEOs must act now to fund significant increases in AI spending, lest as once was said of ‘Big Data’ – to avoid becoming extinct!
Maybe it’s time for a chill pill?
Let’s step back for a moment. What problem are we really trying to solve? And what are the premises upon which we answer this question? It seems to us that the hype and frenetic rush to embrace any and all things AI is based on three themes in play today in boardrooms:
The challenge then, as we see it, is:
We believe the root answer is organizational – namely, should Data Science/AI continue to be a decentralized set of activities as it is mostly practiced today? Or an enterprise C-level mission, reporting directly to the CEO?
We are strong advocates of the latter, an enterprise wide analytics function, headed by a Chief Analytics Officer (CAO). The CAO is a direct advisor to the CEO, serving as a fact-based communicator of the ‘truth.’ No more reporting to the CMO, the CIO, the COO or some other Administrative function.
This point of view challenges the existing corporate norm where analytics is decentralized, with each function and P&L owner having its own pod of data scientists, just as it has other SMEs, i.e., financial analysts, business analysts, HR, etc.
The shortcomings of decentralized analytics are manifold: Analytic SMEs are often ‘orphans’ – just one or a few folks in a line area operating in isolation; few opportunities to engage other analytic SMEs to discuss and share best-demonstrated practices or learn new skill-sets; no real career pathing which translates into high turn-over; little exposure beyond their own domain knowledge limiting the full range of how their recommendations may impact other business units; little development of enterprise-wide institutional history, let alone creation of broadly agreed upon KPIs.
In our prior staff positions leading Business Intelligence functions and now as consultants we have repeatedly been brought in to help fledgling or stymied corporate analytics functions get pointed in the right direction. The common themes we often are asked to confront arise from this decentralized approach:
It is long past due for corporations to embrace an enterprise-wide solution for business intelligence and establish a CAO as a direct report to the CEO. Pockets of analytic activity are by definition, sub optimal and often impede rather than accelerate the successful deployment of analytics throughout the enterprise. The success of an enterprise approach has been well documented by Tom Davenport in his book, competing on Analytics. The time has come for the CAO to really earn his or her C stripe.
We draw from our own experience at a large consumer oriented financial institution which built a 100+ person enterprise Business Intelligence function that supported 16 business units in the US and internationally – marketing, risk management, collections, cross-sell, up-sell, back-office optimization and the like. While the BI function was separate organizationally from the units it served, it absolutely was the case that data scientists worked on a daily basis at the business sites, attending meetings, helping set the agenda, and supporting through analytics, the achievement of each areas respective business goals.
By having an enterprise BI function, it
All of this is best achievable when the CAO is clearly supported by the CEO and that the CEO fully embraces data-driven insights as the standard for business management.
If you are a CEO entrusting your CMO. CIO/CTO, strategy lead, or some other C-executive executive charged with executing an enterprise analytics strategy, please reach out to us. We strongly believe, based on a lot of empirical evidence (right, we too are data driven) that an enterprise-wide analytics mind-set and infrastructure is the best approach to optimizing the huge potential value to be achieved from data science and AI. We can help define the blueprint and the journey to get there.
Tony Branda and Kevin Kramer.