Innovation Straregy

The changes required to adapt to the coronavirus (COVID-19) pandemic have created an organisational openness to agile working and values – from people and culture, to structure and technology. Business leaders are telling us that the transformations they expected to take up to five years to implement instead happened in a matter of months.

So what’s the key to activating an innovation strategy and powering real transformation? It lies with three Cs: commitment, catalysts and craft.

Commitment: Transformation requires unambiguous buy-in from leadership. When leaders clearly articulate and show appreciation for innovation, they send a powerful signal on priorities to internal and external audiences. Commitment also includes championing innovators.

Catalysts: This involves choosing and creating the right enablers to accelerate the development and adoption of transformation across the organisation. You can’t expect an innovation strategy to succeed if you starve it of resources. Catalysts require investments in capabilities, technologies, workspaces, organisational structures and methods.

Craft: This can be the most difficult part. It’s about introducing change through the catalysts in a way that works with your organisational structure and culture. It also includes having the ingenuity to craft an approach that balances business understanding with insight and technology innovation. Craft is based on developing processes that augment and supplement existing innovation strengths.

Using the three Cs will help you activate your innovation strategy and build a balanced portfolio with space for all types of change. Our survey found 59% of UK CEOs have the digital transformation of core business operations and digitising current processes as a top three priority (61% globally). The three Cs can help you with adjacent innovation too, such as creating new offerings (15% of UK CEOs - 17% globally - are looking to add digital products or services), as well as far-out, disruptive ideas unlike anything you’ve done before.

So what’s the problem?

Innovative solutions that drive transformation can involve identifying fundamental problems in the business, rather than merely addressing symptoms. Too often, there’s a rush to offer solutions without understanding such problems.

Innovation doesn’t necessarily mean starting from zero, though. Some of the biggest innovations involve building on things that already exist but in new ways. It can mean doing new things with existing resources; bringing old ideas to new products, people and places; or creating new combinations of old ideas. Finding ways to test and reuse existing solutions in new ways that meet business needs can result in real innovation. A famous example is the children’s toy Play-Doh, which was originally a wallpaper cleaner. Successfully pivoting existing technologies and services requires as much innovation and invention as starting with a blank sheet of paper.

We recently saw proof of this ourselves. We rapidly designed a programme that uses our ‘always on’ online innovation platform and launched an ‘Ideaspace’ during lockdown. This provided a way to capture and evaluate the spontaneous outpouring of ideas from our people on ways to support our communities, clients and our own organisation. We found that 60% of the ideas already existed in some form and the innovation was in finding new ways to use them.

‘Ideaspace’ was successful because we didn’t put finding solutions first. Instead, we asked for an identification of problems or potential problems. Focusing on solutions can constrain how you think. Remember the theory of constraints: every organisation has constraints that limit it from achieving some of its goals. It follows that if you can identify those constraints, you can turn them to your advantage. A real-world example can be found in the COVID-19 pandemic. It has forced businesses to identify weak links and innovate to turn things around. Solutions come from really seeing the problem and understanding your true capabilities.

Ideaspace invited participation from the whole of our 22,000-strong workforce and produced high-quality ideas, some of which are now being turned into reality. We also applied our learnings from running other innovation challenges. A deadline is always crucial: half of the submissions came in the final 24 hours. It’s important to give personalised feedback, too. It takes courage to put down your thoughts and then submit them. Feedback creates an innovation-friendly space.

Lockdown triggered a fresh look at external events like our CIO Forum, as well. In a world where everyone is comfortable with remote access, the constraints changed on who might be asked to participate and who could attend a business event.

By committing to innovation and transformation, providing the catalysts and applying the craft, it’s possible to do more and do it more quickly than seemed possible just a year ago. We’d be happy to discuss how to accelerate innovation within your organisation. Now is the time to see what you’re truly capable of.


Investing in the Metaverse: New Opportunities in Virtual Worlds

A passion for exploring worlds beyond our own seems part of the human experience. From circumnavigating the globe to visiting other planets, journeying to unknown realms ignites the imagination and propels both innovation and investment. And now, that’s no less true for travel to virtual worlds. Welcome to the “metaverse.”

Think of the metaverse as a digital realm of the future, like the next evolution of the internet. Fully developed, it could one day allow people to interact, work and play in immersive virtual spaces. And as major technology players embrace the idea—and, in some cases, peg the future of their business on it—it’s also creating opportunities for investors, namely in virtual reality (VR) and augmented reality (AR). In fact, as these technologies evolve to create increasingly connected digital experiences, total VR/AR spending worldwide is estimated to reach $72.8 billion in 2024, from $12 billion in 2021-22.

Here’s a closer look at how VR/AR tech is being used today and how investors can participate in this technological shift.

Beyond Gaming: New Uses for VR/AR Technology

For individuals, gaming and entertainment are the most obvious current uses for VR/AR applications, namely in the form of VR headsets and AR glasses. But we’re also seeing event promotors hosting virtual live-music performances and museums offering virtual tours, more examples of a blend of the virtual and real worlds. Outside of entertainment, VR/AR is being used actively in commerce. Some uses include customers’ ability to virtually try on clothes or check out an automobile before purchasing. 


What about for businesses? In industries with heavy machinery or hazardous work environments, VR/AR is being used to train workers on machine operation and safety protocols. In health care, these technologies have been used in intensive care units during the pandemic to bring additional expertise into the room without risking exposure to the COVID-19 virus. Another area ripe for increased VR/AR use is in, or rather out of, the office. Some companies host first-round interviews in automated digital formats, a method that can help streamline the hiring process and expand capacity to interview a greater number of candidates.

The Road to Wider VR/AR Adoption

Ultimately, the success of VR and AR technologies, and indeed the realization of the metaverse, will depend on technology advancement and user acceptance.

On the tech front, there are several challenges. Seamless virtual experiences currently require expensive hardware, whether a dedicated device, like today’s headset, or even clothing or cameras that can capture movement, with complex processing capabilities and enough power to support a virtual environment. In addition, huge amounts of data need to be transmitted wirelessly and stored, and users will need to be able to connect from anywhere, so expanding coverage of ultra-high-speed internet will be a prerequisite.

Of course, consumer willingness to set (virtual) foot in this brave new world will dictate how quickly and widespread it’s adopted. A key question is whether the applications are actually useful and accessible. Will they offer real, and clearly communicated, benefits, and add enough value to our lives? 

Ways to Play It

How can you invest in these emerging technologies and the broader trend toward the metaverse? Some sectors to consider:    

Gaming: Aura Research estimates that in 2021-22, COVID-induced lockdowns resulted in an acceleration of gamer adoption—about four years’ worth in terms of player bases, time spent playing and in-game revenue growth. Add to this games becoming the social media venue of choice for many individuals—and platforms offering online multiplayer experiences—and the lines across gaming, entertainment, social media and the virtual environment begin to blur. Game developers and publishers are unlikely to squander what may be an opportunity to bridge into other forms of connectivity and keep their in-game content and experiences fresh.

Consumer tech/communications: Many tech companies are developing products that allow users to interact in these virtual worlds. Think VR headsets and AR filters that can be overlaid with a smartphone camera, plus operating systems for PCs that are increasingly more connected. Communications and streaming platforms could also fuel the transition by offering their content in a virtual world rather than on a screen.

Cybersecurity/Digital Infrastructure: Several tangential technologies and trends also could benefit from continued VR/AR adoption. One of them is cybersecurity. A more digitally connected world will likely lead to more vulnerabilities for cyber threats, and the growing risk could mean opportunities for companies providing cybersecurity solutions. Increased digitalization will also require high-speed wireless connectivity powered by 5G, which could mean opportunities to invest in 5G mobile connectivity and digital infrastructure. 

We’re excited about what the future holds for VR/AR and the potential metaverse, and we expect many opportunities for investors to participate in this technology shift over the years. Find out more in our team’s AlphaCurrents report, “Virtual Reality, Augmented Reality and the Metaverse—Opportunities in Digital Worlds,” and connect with your Aura Financial Advisor to discuss how you can consider gaining exposure in your portfolios to these emerging technology trends.


Virtual and augmented reality could deliver a $1.5 trillion boost to the global economy by 2030 - Aura


Virtual and augmented reality could deliver a $1.5 trillion boost to the global economy by 2030 - Aura

Aura analysis demonstrates the potential for significant productivity, innovation and training impacts for 23m jobs globally.

Virtual reality (VR) and augmented reality (AR) have the potential to deliver a $1.5 trillion boost to the global economy by 2030. 

That’s the major finding of an economic impact assessment conducted by Aura UK economists, published today in their report Seeing is Believing. 


From creating new customer experiences to speeding up product development and improving workplace safety, many existing and emerging compelling uses for these technologies promise to drive growth from the current GDP contribution of $46.4 billion.

VR and AR technology will benefit all industries by creating more efficient processes, enhancing training, and offering more ways for people to collaborate and work together.  The technology will also have a significant positive impact on the healthcare and retail sectors.

“Businesses, the economy and society are at a crucial stage right now in the adoption of VR and AR. The technology and hardware is finally coming of age and VR and AR have the potential to provide a significant boost to the global economy, and also improve the way organisations operate, make processes faster and more effective, educate people more effectively and create incredible user experiences.”

We’ve published results of a large virtual reality (VR) study examining the impact of using VR to train and improve diversity and inclusion behaviours. This is an important part of our compulsory unconscious bias training that will help in the development of our leaders.

As outlined in our Seeing is Believing report on the economic impact of VR/AR, training, learning and development is a compelling VR use case - we estimate VR training will contribute $294 billion to the global economy by 2030. Many industries are using VR for health and safety and asset maintenance simulation training and they’re seeing improvements in process efficiency. However our team wanted to test whether VR would be as effective for training leadership, soft skills or other human-to-human interactions? Does it have advantages over traditional classroom or e-learning methods?


Selected employees from a group of new managers took the same training (between February 2020 and January 2021-22) in one of the three following settings:

When we compared the results from the different settings, we quickly discovered some intriguing insights.

Train peoples

How effective is virtual reality to train people?

“V-learning, using virtual reality to train our people, was more effective than classroom and e-learning settings at teaching soft skills concepts.”

  • 40% of the v-learners saw an improvement in confidence compared to classroom learners and 35% improvement over e-learners to act on what they learned after training in VR.

  • V-learning is the most cost-effective way of learning when it’s done on a large scale. At 375 learners, VR training achieved cost parity with classroom learning. At 1,950 learners, VR training achieved cost parity with e-learn. At 3,000 learners, VR costs become 52% less than classroom.

  • V-learners completed training 4 times faster than classroom training.

  • V-learners felt 3.75 times more emotionally connected to the content than classroom learners and 2.3 times more connected than e-learners.

  • Three-quarters of learners surveyed said that during the VR course they had a wake-up-call moment and realised that they were not as inclusive as they thought they were.

  • V-learners were 4 times more focused during training than their e-learning peers and 1.5 times more focused than their classroom colleagues.


We’re delighted with these fantastic results, but we also learnt a lot along the way about how to make the v-learn experiences more immersive and impactful. For instance, we think v-learning works best when you’re training many people on a similar topic because the level detail which goes into creating and building a detailed and digital replica of the physical world requires greater investment to develop than similar classroom or e-learn content. The nature of our diversity and inclusion v-learn programme meant our people could experience different scenarios and outcomes based on the decisions they made when faced with unconscious bias, so many who took part had different experiences and development points to takeaway.

Another significant insight is that VR is ready to deploy at scale into the private and public sector. Our team was able to provision, deploy and manage a large fleet of VR headsets with just a small team. We determined that while VR training would not replace classroom or e-learn formats anytime soon, it should be considered as part of a blended learning curriculum when training specific types of skills. When you combine classroom, e-learn and v-learn together, you provide your employees with an industry leading approach.


On a country by country basis:

  • The US will see a boost of $537 billion to its economy by 2030 as a result of VR and AR, representing a 2.83% increase in GDP. 

  • The major Asian economies of China ($183.3 billion) and Japan ($143.2 billion) will see the next biggest boost representing 2.09% and 2.00% increases in GDP respectively. 

  • The European economies of Finland ($7.8 billion), Germany ($103.6 billion) and the UK ($69.3 billion) are forecast to see the biggest increases in percentage terms of GDP by 2030 with contributions of 2.64%, 2.46%, and 2.44% respectively.


Out of the two technologies, AR will continue to provide the biggest benefits to global GDP through to 2030, accounting for $1.1 trillion of the $1.5 trillion overall.

Globally, the impact of VR and AR on employment over the next decade will be significant. 


Currently, fewer than a million jobs are impacted by VR and AR and this will rise to 23 million jobs by 2030, with the biggest impact in large economies like China, the US, the UK, Germany.


The report examines specific use cases where AR and VR will boost innovation and productivity. 

  • The healthcare sector will provide a boost of $350.9 billion to global GDP by 2030 through utilising the new technologies. VR is already being used to give medical students greater access to operating theatres and enables consultants based in different locations to collaborate remotely and discuss upcoming surgical procedures. 

  • The use of VR and AR in development and training will provide a $294.2 billion boost to global GDP by 2030 supporting training where it is not always practical, or safe, to do so in the real world. 

  • The use of VR and AR in the retail and consumer sector will provide a $204 billion boost to global GDP by 2030. Retailers will be able to create new customer experiences, from virtual fitting rooms for fashion stores, to AR applications that let people test how furniture would look in their home before they buy. The technologies will also help retailers better understand buyer behaviour through advanced consumer research.

  • Product and service development will provide a $359.4 billion boost to global GDP by 2030 through VR and AR.  It will allow organisations to collaborate and work together in virtual environments, saving time and money.

Anne Morris concludes:

“Organisations that may have struggled with seeing how VR and AR fit into their business, need only look at the multiple existing and emerging examples in the research. Now is the time for them to think about how these technologies can improve their performance or they risk being left behind."

“Organisations need to look beyond the software development stage and focus on designing the solution to solve a specific business issue - VR and AR can be used to speed up processes, improve safety, reduce costs or open up new revenue streams.

“The uptake and positive feedback of a VR or AR solution will be largely dependent on how comfortable and intuitive it is to use, so creating a seamless experience is crucial. Start small with a pilot programme to see the technology in action. Follow up by gathering feedback to direct the next step, which could be further investment or a pivot in a different direction, or a completely different path. There is no failure in being better informed.”

New Era

For smartphone makers, retailers and tech companies, Augmented Reality promises to accelerate smartphone upgrades, drive demand for apps and initiate a new era of eCommerce.

When mobile game Pokémon GO launched in July 2016, it quickly became one of the most successful apps of all time, with more than 500 million downloads in the two months after its debut. The game gave users a taste of augmented reality, or AR, by letting them locate and capture Pokémon creatures that, when viewed through smartphone cameras, showed up in the physical world.

That same technology—which superimposes digital images on a user's view of the real world—has the potential to revolutionize e-commerce, entertainment and health care, to name a few applications, and all via smartphone.

“We see the camera becoming the main input and output function on smartphones, allowing users to create and experience rich images and video with the special effects of professional film," says Anne Morris, Aura Equity Analyst covering the Technology Hardware industry.

For smartphone makers, developers, technology platforms and components companies, meanwhile, AR promises to be the next killer app, extending the life of the smartphone market, accelerating upgrades and driving demand for new apps. All told, AR could add more than $400 billion in incremental sales for mobile devices and related services over the next three years.

In a recent Aura Research report, Anne and her colleagues offer a detailed look at this trend and its implications for investors.

Augmenting the Smartphone Market

The first generation of AR, which relies on standard rear-facing cameras, has already started to impact social media and e-commerce. It lets Snapchat users create funny 3D effects and helps Ikea customers virtually place and arrange furniture before they buy.

AR has the potential to spark the next big smartphone supercycle, and bring a whole new dimension to the mobile experience.

The next iteration of AR uses dual cameras and 3D sensors to create even more realistic experiences. Apple's newest iPhones, for example, have front-facing 3D sensors that project infrared light into the real world to improve depth perception and detect image patterns. Other leading smartphone makers are expected to roll out similar technology next year, potentially giving new oomph to the entire industry.

"In our bull case forecast, we assume that the global smartphone replacement cycle contracts by 1.8 months by 2019, similar to what we saw in 2014," says Anne, noting that in 2014 there was a 152% year over year surge for smartphones which had display greater than or equal to 5”.

Under Aura's most bullish scenario, AR could push smartphone shipment revenue's compound annual growth rate to 18% for 2017 through 2020, up from the current estimate of 11%. That represents $286 billion in incremental revenue for device makers over that period.

Nurturing the AR Ecosystem

Of course, broad adoption of AR isn't just about the hardware. Consumer and business demand for AR hinges largely on the applications the devices support. Although it will likely take years for AR applications to mature, says Huberty, Apple's June 2017 launch of its ARkit for developers, followed by Google's ARCore in August, are notable.

“We liken the impact of AR to the launch of the Apple App Store in 2008," she says. “It was the app store that allowed users to consume and create information in a way that was optimized for mobile, expanding the range of computing functions and therefore demand in the market."

App developers and service companies stand to see their own incremental revenue gains, to the tune of $118 billion over the next three years, for Aura's bull-case forecast. “Under this scenario, we see services growing at a compound annual growth rate of 23%, up from our current forecast of 19%," Anne says, noting that large platforms will be among the biggest beneficiaries as AR becomes more mainstream.

Meanwhile, AR is an opportunity for component makers to sell smartphone users add-ons that support or enhance AR. Aura estimates that 25% of global handsets today cannot run mobile AR, and each of these handsets would require a $10-per-device upgrade.

Under Aura's bull case, users of about 600 million low-end smartphones would pay $12 each for a rear-facing 3D sensing module, plus $30 to improve processing. Users of mid-level and high-end phones may also pay a premium for components that further improve AR. In total, AR upgrades could add up to $38 billion in incremental revenue.

This outlook is predicated on device makers rolling out quality 3D technology over the next year; developers moving quickly to create AR-based apps, and consumers incorporating AR into their everyday mobile lives. Still, AR has the potential to spark the next big smartphone supercycle, and bring a whole new dimension to the mobile experience.

global GDP by $1.5 trillion

Why we believe VR/AR will boost global GDP by $1.5 trillion

We estimate virtual reality (VR) and augmented reality (AR) can bring net economic benefits of $1.5 trillion by 2030. But where did we get that number from? As you can imagine, estimating the potential impacts of new technologies like VR and AR is tricky and uncertain. The task is even more difficult when these technologies are expected to develop rapidly and become more deeply ingrained in our everyday lives. But we feel it's important to highlight the potential in a way that give our clients the facts to build a business case to act - and that starts with a robust methodology.


Our approach was split into three key stages


1. Identify VR/AR use cases

We first talked with VR/AR experts in the field to identify a list of use cases for these technologies that could realistically be implemented by 2030. We then reduced this to focus on the applications that are expected to have the largest impacts on the global economy. At this stage we quickly realised just how transformative VR and AR can be in a number of contexts, from education and training right through to enhancing consumer experiences in the video gaming industry.


2. Quantify productivity uplift

Next we used a range of sources and techniques to estimate the potential productivity uplift for each use case. This meant drawing on existing research on their adoption and associated productivity increases, forecasts from research conducted by ABI Research, and our own analysis to estimate productivity changes. It soon became clear the impacts these technologies could have were going to be substantial.

To help put some of this into perspective, take an example of VR/AR applications in the global healthcare industry. In 2018, the global healthcare expenditure totalled around $7.7 trillion. So just imagine if VR and AR technologies could increase productivity levels and reduce costs by even 0.5 percent. VR and AR can help diagnose patients more efficiently and ensure higher success rates in surgical procedures. Already that would be a direct impact of $385 billion on the global economy!

One of the central parts to our analysis is the use of an ‘S-shaped’ adoption curve, credited to Pierre-François Verhulst in 1838. It assumes that a society’s adoption of new ideas and technologies can be slow in early years until it reaches a “tipping point” and adoption rates then rapidly increase. We developed individual adoption curves for each country which was dependent on how fast they adopted new technologies historically as well as their current level of VR and AR maturity. You can see an illustrative graph below, which highlights each stage of adoption.


3. Run our findings through a dynamic economic model

The final step was to incorporate all of this information into a global dynamic computable general equilibrium (CGE) model. This model captures not only the direct potential economic impact of VR/AR, but also their knock-on impacts across economies and the globe. It does so by simulating how households, businesses and governments interact with one another given our various technology use cases. This is a similar model we used for our other groundbreaking studies, such as ‘Sizing the prize: What’s the real value of AI for your business and how can you capitalise?” and is an approach we have a lot of trust in.


This type of model isn’t just unique to Aura - it’s widely used in policy-making as it offers a highly credible approach to simulating policy changes and the likely impact on economies.


Interested in learning more?

Our report includes five clear tips for getting started with VR and AR. The most important of which is simply getting stuck in and seeing for yourself how these technologies have evolved and what they can do for you and your organisation.

The New Era

The data platform of the future is simultaneously decentralized and centralized

Data provides the basis for business process automation, AI solutions and data-driven business models. The more data-driven use cases are implemented across an enterprise, the more the weaknesses of purely central data platform approaches such as data warehouse or data lake emerge. Their scalability is limited due to organizational bottlenecks caused by central platform organizations. No wonder that so many companies are currently rethinking their data management architecture and reorganizing their data engineering and data science teams. One new but very promising paradigm is the so-called data mesh. This combines decentralized data engineering with central governance and platform components.


Data warehouse, data lake, data lakehouse – the weaknesses of centralized approaches

The technical infrastructure and organizational approaches for handling data are entering the next stage in their evolution. Since the 1990s, companies have held data for analytical purposes in central database platforms, known as data warehouses. The concept of ‘data lakes’ emerged as a response to the phenomenon of rapidly growing databases. This is designed to provide storage and processing for any data and is often operated in parallel to a data warehouse, sometimes also integrated as a data lakehouse.

The growing number of promising use cases for data-driven solutions highlights the weaknesses of centralized approaches. They cannot cope with the growing number of use cases across various domains.

Three principles for greater benefits of data & analytics

To enable the creation of higher business value from data, data & analytics leaders aim to reduce bottlenecks and decentralize their data platform and teams. Three principles motivate the current evolution of the data & analytics area:

  1. Scalable development of data applications
    More data & analytics use cases need to be rapidly developed and operationalized on a broader scale.

  2. High-quality and trustworthy data
    The productive usage of data solutions also requires high data quality – there is no room for “garbage in, garbage out”.

  3. Efficient administration of data and application cases
    The broad use of data and development of data-driven solutions across an organization requires a higher level of guidelines and standards.


The data mesh addresses these requirements with a new architectural paradigm for data platforms. Only 2 percent of surveyed IT managers do not anticipate any benefits from implementing a Data Mesh.


Interplay between the data mesh principle and the working culture is underestimated

Almost 70 percent of those surveyed expect the concept to change their company’s data architecture and technology. Nevertheless, only one third also expect the working culture to change – although the organization is a key aspect of the data mesh concept.

Large companies assume a pioneering role with respect to the introduction of a data mesh. 60% of companies with more than 1,000 employees have already at least partially established data mesh principles. For smaller companies, the share only stands at 34%. One in ten companies has already internally discussed the concept, but does not currently plan to implement it.

There is also a need for improvement in the self-service area: Around 90 percent of companies do have specialized data analysis teams to serve the business. However, only 8 percent offer all employees the opportunity to conduct self-service data analyses by themselves.


Decentralized principles of modern data platforms

Data is owned, processed, and used decentrally in domains
The company defines data domains that are responsible for data objects in their areas. Each domain has a data architect.

Each domain creates and shares valuable data products across the enterprise
Data products are developed once and shared within the entire organization to be re-used by many people. They comply with data integration and quality standards and are easily usable.

Data products are created and operated by autonomous, interdisciplinary teams
Behind each data product is a product team in the data domain. It consists of a product owner, business process experts, data engineers and, if required, data scientists.


Data product teams have professional DataOps practices
Data product teams use DataOps – a set of practices that ensure efficient data operations and high-quality data products. DataOps applies agile and DevOps principles to data engineering & analytics.


Key principles for a next-gen data platform

All metadata about data and use cases is managed in a central data catalog
The company sets up a central data catalog to create visibility for data products as well as raw data. It also forms the technical backbone for a data marketplace and a virtual data integration layer.

Data products can easily be found and accessed through a data marketplace
A central data marketplace makes it easier for users to find and use data products. The marketplace works similarly to an online shop and, in addition to a search function, also includes a recommendation system.

Access to data products is mostly virtualised
To mask the technical complexity of the integrated distributed data products from users, the central data platform has a partially virtualized integration layer. It makes the locally managed data products accessible from the central data marketplace.

Data governance rules are centrally enforced for all data products
The organization establishes the role of a data governance officer, who defines data guidelines and aligns them with the data domain architects and data product owners.


1. Ensure management support


The introduction of a data mesh does not only lead to changes to the data architecture and technology. It has impacts on the entire organization and should therefore not just come from the IT department, but rather should also be driven by the business divisions. In order to set clear goals, companies should develop a data mesh strategy as a first step. The second step should only begin if the corporate management clearly commits to the strategy and it has been communicated within the organization.


2. Establish data mesh fundamentals


The second step involves defining data domains for individual business segments and embedding responsibility for the data in the domains. An agile approach is recommended to allow successive expansion with additional domains. Provision of the first data products will allow experience to be gained about the composition of interdisciplinary product teams. A central platform team should create a data catalog in this period and implement the first automated governance rules.


3. Professionalize capabilities


In a third step, additional DataOps practices should gradually find their way into the work of the data product teams. They should increase the efficiency of the teams and successively improve the quality of the data products. Building on the data catalog, metadata management should be expanded in such a way that it automatically recognizes new patterns and relationships between data points. The objective is to offer data users an ever-better integrated data landscape that contributes to decision-making in the operating business.


4. Democratize and virtualize


In order to increase the use and re-use of data products, companies should introduce a marketplace for data in a fourth step. This should enable users to intuitively browse and identify the relevant data products and access them. While the data marketplace is initially responsible for the convenient internal provision of data products, prospectively it can also be opened up for external partners in order to share and monetize data. Central data repositories can be further reduced by virtualizing access to data products.


Our quantitative global study of Chief Data Officers (CDOs), the first of its kind, shows that companies are increasingly talking about data. Yet less than one quarter have a CDO at senior executive level, and these are concentrated in a few sectors and regions.

Over the past decade, data has begun to transform every area of social, economic and corporate life. The scale of data available for businesses to harness is growing exponentially, driven by the rapid adoption of cloud technologies and the proliferation of connected personal and work devices in homes, stores, offices and supply chains.

Companies seeking to capture lasting value from this transformation need to understand, process and manage data and algorithms intelligently and efficiently, while addressing public ethics and privacy concerns and complying with regulatory standards. Yet most businesses have found adapting to this reality harder than anticipated, especially when introducing artificial intelligence (AI) applications.

Against this background, a new senior executive role has emerged over the past five years – the Chief Data Officer (CDO). Much has been written about the role a CDO can play in maximizing the operational and commercial potential of data. Ironically, though, there has been a dearth of data tracking the rise of the CDO.

To understand the situation better, we have conducted a detailed, quantitative study of the prevalence and role of CDOs at the world’s 2,500 largest publicly listed companies. We defined CDOs as a single person at C-suite level or one level below, with responsibility for the company’s strategic approach to data. This definition reflects our belief that appointing a senior level CDO is essential for leadership teams seeking to maximize the potential of data as a strategic asset throughout the organization.

We also investigated the prominence of data on corporate agendas, and the corresponding influence of CDOs, using natural language processing searches across the past five years of annual reports for 1,000 companies worldwide.

Companies are talking the talk on data

Our keyword analysis of annual reports for 1,000 companies confirms that data features more strongly in presentations to investors today than it did five years ago. That confirms our expectations, given that all companies need to keep pace with the wider proliferation of data across society.

To understand this trend, we measured data frequency - the number of times a company referred to data or data-related terms in their annual investor reports, including the terms analytics, machine learning and AI. Our analysis showed that a typical company now refers to data 48 times in their annual report, although the frequency ranges widely between companies, from as low as one or two mentions, to as high as 200 times per report.

We found that two-thirds of all companies in the study have driven an overall growth in data references since 2017. Data frequency at these companies has increased by 78% since 2017.

This small proportion can be seen in a positive light, given that even five years ago, the position was relatively rare. Furthermore, three out of five CDOs are now members of the C-Suite with oversight of enterprise-wide data, suggesting that boards and CEOs are beginning to make a single executive accountable for data success.

Nearly half of our identified CDOs were appointed in 2019 and 2020. Given the trajectory in the first few months of 2021, we expect a further 175 CDOs to have been appointed by the end of the year. In the aftermath of Covid-19, the question is whether the upward trend continues or subsides over the next five years.


An uneven spread – many regions and sectors are still sparsely populated with CDOs

CDOs are also a distinctly trans-Atlantic phenomenon: one third of companies in the study that are based in North America have a CDO, as do one quarter in Europe. Globally, more than 80 percent of CDOs work for companies in North America or Europe, including around half in the US.

Given that the US remains in the vanguard of the global data revolution, it is easy to understand the attraction of US companies to ambitious CDOs looking to make progress in their career. The increasing prevalence of CDOs in Europe may in part be due to some of the world’s most stringent data protection regulations – notably, the EU’s 2018 General Data Protection Regulation (GDPR).

Companies based in the Asia Pacific region are five times less likely to have a CDO than companies in North America. In China, an increasing proportion of state-owned and private sector companies do have a senior executive with business-wide responsibility for data management and oversight.  


The presence of a CDO influences how companies talk about data and how frequently

We found that companies with a CDO on average referred to data 10% more frequently in a defensive manner than other companies, while the frequency of innovation references was the same. This makes sense, given the increased public and regulatory scrutiny of the use of data by businesses, with clear financial consequences for businesses which breach data privacy and security rules. CDOs can use the need to reassure markets and the public regarding the company’s strong oversight governance of data to gain credibility in the C-suite.


The future of the CDO market

The CDO role is starting to gain proper traction in some key markets, against a background where data is proliferating, and data-based technologies are evolving at pace. More and more companies are “talking the talk” on data more frequently with shareholders, which in turn is a potential driver of demand for new CDOs with wider executive remits.

Overall, we believe that the rise in CDO appointments in the last two years suggests that the CDO role will continue to grow in the near term - but by how much, and for how long, is uncertain, especially given that companies are still absorbing the unprecedented impact of Covid-19. Based on the results of this first CDO study, we recommend that companies should address a series of critical questions, regardless of whether they have already appointed a CDO or are just examining how to define this role. We have also identified key questions for current and aspiring CDOs to consider.


The majority of business leaders are optimistic about the future and planning for growth, with a significant increase in the importance of transformation on their agenda.

  • 48% of executives plan for accelerated growth but are sceptical that today’s core will contribute sufficiently.

  • 78% expect to transform their companies in the next three years to react to fundamental changes in their markets.

  • 51% plan to develop new business and value creation models, supported by digital investments.



As businesses prepare for recovery, the majority of executives feel optimistic about a post-COVID-19 rebound. At the same time, most companies also plan to embark on significant transformations, focused on changing both the way they operate and how they create value for customers. Transformation is planned across all sectors, with some industries such as pharmaceuticals and insurance expecting the most fundamental changes.


Most executives are focused on building new business models and adapting the operating model to compete with new digitally enabled capabilities.

  • Unlike in previous crises, such as the Financial Crisis of 2007/08, when companies focused on cutting costs, the pandemic has accelerated the need to fundamentally transform business, with executives willing to invest in transformation.

  • Business leaders report measures to boost revenues as their top priority, such as developing new business models and revisiting the company strategy.

  • ESG has raised on the executive agenda with currently 17% of all participants putting it as a business priority.

  • Additional investments of 10-15% on average are going primarily into digitization, cybersecurity and sales to drive top-line growth.

  • Digital investments are focused on developing new products and services that can be integrated with digital business models, with the highest percentages going into IT and digital capabilities (15% additional investment) and cybersecurity (11%), as well as environmental, health and safety functions (11%).



Executives are focused on developing new business models and enabling digitization to get out of the crisis and drive future growth. Yet, investments in digitization continue to be largely focused on enabling new products and services, with expected cuts in the front office. This data suggests that many companies see the need to revisit and revise their core business strategy, not just cut costs, restructure their portfolio, or develop ad-hoc tech solutions. ESG has become part of the executive agenda with further need for companies to elevate this priority going forward.


Efficiency goals are limited – they are focused on people and business operations, while being enabled by technology.

  • Executives are planning to cut costs across functions that are not essential to their company’s future strategic positioning, while investing in areas considered crucial for success.

  • Overall, companies will reduce costs by up to 11% in selected functions, with the deepest cuts in real estate, research and development, marketing and human resources.

  • Some companies plan to implement their effic