Today, most organizations are striving to tap into the potential value that comes from being more data-driven. For example, research by MIT professor Erik Brynjolfsson found companies that embrace data-driven decision making have output and productivity that is 5-6% higher. Richard Joyce, Senior Analyst at Forrester stated, “For a typical Fortune 1000 company, just a 10% increase in data accessibility will result in more than $65 million additional net income.” Forrester also estimates data-driven businesses are growing at an average of more than 30% annually.
Despite the many benefits that data offers, cultivating a data-driven culture hasn’t been easy. Recently, NewVantage Partners published a study that showed companies are failing in their efforts to become more data-driven. The report revealed 72% of the survey participants—primarily C-level executives (97.5%)—stated their organizations hadn’t yet forged a data culture. In addition, the percent of respondents that indicated they had “created a data-driven organization” decreased to 31% in 2019 from 32.4% in 2018 and 37.1% in 2017. Rather than seeing an increase in the number of data-driven companies over the past three years, the study showed a 16.4% drop from 2017 to 2019. Instead of seeing greater digital transformation, we’re seeing a disappointing digital regression.
If you’re wondering how data-driven your organization is, it may be helpful to compare your company’s data usage to that of your own smartphone usage. Today, most people will be distraught if they lose their phones for an extended period of time. Most of us don’t realize how dependent we are on these devices (and their apps) until they’re broken or lost. Similarly, when it comes to your data, what if your team lost access to it for a full day? How about an entire week? If you were to rate your organization’s reaction, where would it fall on the following scale?
If your company lands on the left side of the scale, you’re more data-detached than data-driven. It doesn’t mean you don’t have data or don’t use it regularly, but it’s not essential to how you operate. Today, most firms–large and small–have a bounty of data, but its presence doesn’t mean it’s actively relied on for decision making. Only when losing access to your data becomes disruptive or painful has it become an essential part of your daily processes.
If you don’t have a data-driven culture, what can you do to foster one? Unfortunately, despite all of the marketing materials to the contrary, a data-driven culture can’t be purchased or manufactured—it must be nurtured and developed. This may come as a disappointment to many executives who hoped technology could help them catch up to their more data-savvy competitors. While having the right technology is important, it isn’t the area where companies struggle the most. The aforementioned study showed the main challenges to becoming data-driven were people (62.5%) and process (30.0%)—not technology (only 7.5%). This data reinforces the need to take a more holistic approach to nurturing a data-driven culture.
If you want to foster a data-centric environment that constantly leans on data to enhance efficiency and effectiveness, you’ll want to focus on the following four pillars:
1. Shift the MINDSET
One of the hardest challenges is to shift the collective mindset of your people to embrace data. You’ll need to be both diligent and patient as you attempt to steer your team in a new direction. The following focus areas can help with changing the mindset:
- Executive sponsorship: If your leaders don’t believe in using data, it’s going to be very difficult to expect others to adopt a data-driven mindset. Leading by example is one of the most powerful methods for building a data-driven culture.
- Quick wins: One of the best change management tactics is to generate quick wins. When your people see and experience the tangible benefits of using data, it is harder to resist the need for change. Your data-driven momentum will grow with each new win.
- Experimentation (Test & Learn): Data-driven companies like Amazon aren’t afraid to test ideas, make mistakes and iterate. When you test everything, you instill the discipline of relying on data to inform decision making and help innovate more quickly.
2. Strengthen the SKILLSET
To succeed with data, your employees will need specific data-related knowledge and skills. While you can certainly hire people with data skills, your existing talent possesses valuable domain knowledge and expertise. The following focus areas can help boost your employees’ skills with data:
- Data literacy: The best library in the world isn’t valuable to someone who can’t read. You need to ensure your employees are provided with basic training on how to read and understand the data they’re expected to consume and use on a regular basis.
- Data storytelling: Beyond just data literacy, people need to be able to communicate key insights they find in the data to others. They will need to be able to combine data, narrative, and visuals effectively to ensure insights are easily understood and can drive action.
- Analyst resources: Some organizations have failed to hire an adequate number of data experts. Now, they lack the data trainers and coaches who can help the rest of their co-workers become more data-savvy.
3. Sharpen the TOOLSET
Over time, organizations can accumulate a variety of data systems and tools. Unfortunately, this siloed scenario can often hinder rather than help the development of a data-driven culture. The following focus areas can ensure you have a solid technology foundation for establishing a data-driven culture:
- Single version of truth: Regardless of how many data systems your organization has, you need to establish a common data language. Your organization will need a single view of your operating metrics that everyone embraces as the real, trusted numbers.
- Self-service model: If you can democratize the data to more business users, you not only free up your analysts and data scientists to focus on more strategic projects but you also empower employees to leverage data on a more regular basis.
- Automation: Today, many of the labor-intensive analytics tasks such as data cleansing and reporting can be automated. When and where it makes sense, you’ll want to place as much of the data burden on machines so people can be freed up to add value in more productive ways.
- Process integration: Your analytics tools can become even more powerful when they’re integrated into your existing processes or systems. For example, you can enhance the productivity of your meetings by leveraging dashboards as meeting agendas.
4. Solidify the DATASET
Data is a means to an end. The relevance and quality of the data will determine whether it is embraced or not by people within your organization. The following focus areas will ensure your data is useful, trusted and protected:
- Strategy alignment: Many organizations fail to clearly define and communicate what their core priorities are. Your data will only be useful if it is closely tied to measuring your business performance. It’s imperative that your analytics tools remain closely aligned with your business strategy over time–or the output (data) will become less and less useful.
- Data governance: If you see data as a business asset, you’ll want to protect and maintain its quality. However, it’s important to balance oversight with accessibility so the desire for compliance doesn’t overshadow people’s ability to create value with the data.
- Data privacy & security: To mitigate potential risk, you must ensure data privacy is respected and data is used securely. Business users should be fully trained on the consequences that can happen when data isn’t properly protected. Part of establishing a data-driven culture is helping everyone realize they play a role in securing these digital assets.
The examples under each of the pillars only represent a subset of the factors that contribute to developing a data-driven culture. Hopefully, the four pillars serve as a useful framework for evaluating what potential gaps you may have in your overall data strategy. Developing a data-driven culture at your organization will take time and effort—it’s a long game, not a short one. People will continue to be the most difficult aspect of the cultural change. As Flight of the Buffalo authors James Belasco and Ralph Stayer said, “Change is hard because people overestimate the value of what they have and underestimate the value of what they may gain by giving that up.” If you focus on the areas outlined above, you should reach a tipping point where the data advocates in your organization eventually outnumber the data avoiders.
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