“You can’t manage what you can’t measure” – Peter Drucker, Management Thinker
With this statement, what Peter Drucker communicates is that unless we establish defined metrics for success, it becomes almost impossible to quantify the progress and adjust processes to reach the desired outcomes. The modern day enterprises have been receptive towards this attitude and are employing data to measure and adjust their processes to receive favorable business outcomes. However, as the competition in a growing global market intensifies, restricting data use to only certain departments of the enterprise cannot allow organizations to stay ahead of the curve. Today, to build a successful and profitable organization, organizations have to look towards building a data-driven culture – one, where legacy guesswork and the quintessential ‘gut-instinct’ is replaced with quantifiable data.
A report generated by McKinsey Global Institute shows that companies that are data-driven are able to make better decisions. This report indicates that data-driven companies increase chances of customer acquisition by as much as 23 times, have a 6 times higher chance of customer retention and have 19 times more likelihood of profitability. These numbers clearly point out the positives of being a data-driven organization. However, with data siloed across several departments, limited cross-functional access to data and data sources, tools that are not as intuitive or as fast as desired, how do organizations actually become data-driven? While the use of technology, having strong data governance processes, better data access are some important factors that contribute to an organization becoming data-driven, having leadership buy-in to create a culture that puts data in the heart of the organization is a must. In this blog, we take a look at how to build a data-driven culture within your enterprise.
Get Leadership Buy-in
Since culture eats strategy for lunch, it becomes the responsibility of the leadership to put data into the heart of the company culture to make the organization high-performing. It is true that data can only take an organization so far. For it to deliver transformational value, leadership has to leverage data to make decision making evidence-based and not based on the gut. When the leadership employs data to gain a 360-degree view of the organization, they can make strategic decisions better since ‘the data never lies’. For a data-driven culture to take hold, it has to be fostered and adopted by the entire organization, starting right at the C-suite and trickling down to the last employee.
Recognize the Value of Data
Gathering volumes of data today has become relatively much easier than even a decade ago. With multiple data source becoming a data rich company is now an easy task. However, while collecting data is important, it is even more essential to utilize the data. Developing a mindset where every decision has to be backed by data, using data to define success metrics, utilizing data to measure business aspects, and generate actionable insights become essential when creating a data-driven culture within an organization.
Foster Data Collaboration
A report from E&Y revealed that while 81% of companies believe in the importance of being data-driven, a vast majority keep the data in silos. Today, accumulating data is not a challenge. Most organizations have petabytes of data ready at their disposal. However, the size of the data stops being relevant after a point. Having an ocean of data and not enough resources to analyze it renders data useless. Organizations also need to absolve themselves of the proprietary mindset towards data and analytics tools and create a culture that supports the sharing of data.
What organizations need to do is ask themselves relevant questions regarding how data can improve their existing performance. Once different departments within an organization identify what problems they want to solve with data, organizing that data becomes simpler and effective. It, thus, becomes imperative to have the dedicated resources and tools in place to gather, organize, and analyze the data and manage business intelligence functions to create a data-driven culture.
Defined Performance Indicators
To put data into the heart of the organizational operation, it becomes imperative to clearly define processes and performance indicators that are critical to business. To do this, it becomes essential to ask the right questions that can drive a business impact and this can only be done with the help of data itself. To create a data mindset, therefore, organizations need to define a goal, keep the goal in focus, and take quantifiable steps to move towards that goal. The data will do the rest.
Strong Policies to Govern Data Access
If an organization is data-driven then everyone has access to all the data, right? The fact is, data-driven organizations have very clearly defined policies regarding data access to specify access levels, establish a chain of custody to mitigate risks and identify who all can access and alter information provided by the data. Data-driven organizations rely on recent and relevant data and keep it centralized for frequent updates. To ensure that the data is leveraged correctly, such organizations need to adopt a layered approach to managing key indicators where each metric is linked to a function and has clearly outlined outcomes. These metrics are also communicated transparently to the workforce across the organization via dashboards, spreadsheets, and reports to deliver business value. Data-driven organizations have strong data governance policies to make sure that the right workforce has access to the right data to make faster decisions and that compliance norms are adhered to at all times.
Embed Analysts with Business Teams
In order to treat data like an asset and create a data-driven culture, it is important to have employees who are data-driven themselves. While all employees within an organization cannot be data scientists, it helps to embed analysts within business teams so that they can contribute their analytical perspective and effectively persuade business people to leverage analytics to test their assumptions to improve business outcomes.
Make Data User Friendly
More than having a large data repository, data-driven organizations make sure that they use the data at their disposal at the right time. For this, such organizations leverage the most innovative analytics tools and embed these tools with existing ones in order to make them more intuitive and user-friendly. By doing so, these organizations are able to gain intelligent insights quickly and answer pertinent business questions faster. However, organizations have to be careful and avoid analysis paralysis that comes with having too much data and actually clouds decision making by creating intelligent dashboards that provide only the information relevant to the stakeholders.
In order to become a data-driven organization, companies have to look towards data to make everyday decisions and encourage their workforce to do the same. By treating data as an important business asset and associating value and responsibility with information, organizations can replace the legacy gut instinct with relevant and tactical information. Going by the words of American Statistician W. Edwards Deming, we can simply say “In God we trust, all others must bring data.”