We’ve already written about the growing role of the chief data officer(CDO) and their challenging task to leverage data science to drive profits. But the job of a CDO is not just about moving the profit meter.
It’s less-widely known that they’re also tasked with meeting three other business objectives: finding ways to drive overall growth, improve efficiencies and manage risk.
Why? All business activities and processes benefit from these three objectives.
Luckily, we can turn to Morgan Stanley’s CDO, Jeffrey McMillan for some guidance. I heard him speak at a recent CDO Summit in New York City, where he dispensed sage advice for both practicing and aspiring CDOs.
McMillan suggested these five analytics and data strategy processes:
1. Make sure your data science is aligned with your business strategy.
Yes, good data scientists are hard to find. But McMillan says that rather than spending your energies finding a good data scientist, make sure that your scientist can also think like a sales or business person.
He says, “I would much rather have a very mediocre data scientist, who really understood the business than the reverse. Because the reverse doesn’t help me at all. It’s not about the algorithm, it’s about understanding of the business.”
Once you have your data scientist in place, McMillan is adamant about ensuring this resource is honored and respected.
He explains, “If no one is actually going to do anything with what you recommend doing, they don’t get more resources. There are a lot of things we learn about the world that are interesting that don’t actually change our behaviors. And we need to focus on things that changes our behaviors.”
2. Empower the end users to consume data visualizations
According to McMillan, it’s more important to get a little bit of data in the hands of many, than a lot of data in the hands of few. Why? It’s vital to bring data to the decision makers.
“They don’t always want your algorithm,” McMillan says. “They do want information about the business.”
Moreover, his plan for Morgan Stanley to make data accessible to everyone is this: “Our vision is: in the next five years, I want every single employee in our firm to have access to a data visualization tool. And I want 15-20% of the employees to be able to create their own content using their own data visualization tool.”
3. Create the next-best action framework
McMillan has a process that makes decision making vastly better. He calls it the “next-best action framework.” This system learns, evolves, and adjusts in real time.
He describes the process in the following way:
“Everything single thing that a human can do at the office gets ingested into a system. It gets modelled against their own expectation, their historical behaviors, their customer’s behaviors, market conditions, and if you can believe, 400 other factors.
Then, it gets optimized, based on specific needs of the customer and the employee. Out comes a few ideas, which are scored.
We score whether or not we should call a customer about a bounced check versus an opportunity to call them about an opportunity about a golf outing. Then, we watch what the customer does.”
According to McMillan, Morgan Stanley has found success in their next-best action approach, delivering real time investment advice, in scale, to 16,000 advisers.
4. Leverage digital intelligence
When it comes to artificial intelligence, the real value is in the intelligence. In some ways, McMillan prefers the term digital intelligence.
“We’re digitizing human understanding in a way that creates scale,” notes McMillan. “In the end, the winners aren’t going to be the technology providers. They’re going to be organizations that have the knowledge. If you have knowledge and information that’s differentiated, you will do well in the space over time because someone will have to teach the machine how to start. It just doesn’t learn by itself.”
When you can, remember to keep it simple. McMillan reminds us, “No one cares how hard it is for you to do it.”
5. Take a holistic approach to data management
Finally, McMillan warns that your efforts will fail or significantly under-deliver if you don’t take a holistic approach to managing one of your firm’s most valuable resource – your data. To prioritize, he says to focus on the most critical attributes that drive your key business objectives.