Benefits of a data-driven culture
As the world becomes exponentially more digital, on any given day, businesses face an ever-increasing ongoing stream of data and information. This data, while hard to funnel, has the potential to form the lifeblood of the company. Many have hailed data as being the “new oil” for the technology age. There is no question that data has become a highly valuable business asset, and those using it effectively are accelerating beyond the competition.
If you think about the most successful tech companies like Google, Facebook, Amazon or Apple you realize that data is what fuels their growth and that they have made massive investments to understand it. These companies almost know more about the habits of their customers than the customers themselves do. As a result, these tech firms have leveraged their data-driven culture to become giants always staying one step ahead of their competitors using sophisticated analytics and modeling.
There is a lot of debate around strategic challenges, such as having the right people, skills, and technology available in the business to use data effectively. Beyond that, companies tend to see the cost of investing in those things as a barrier to their growth. In this article, we look at the benefits of adopting a data-driven business culture and why it is worth the outlay.
Maximizing your business data
Most business will have years of data built up through legacy systems but without any formal management process, have never been able to understand it and unlock the value. Often, when companies start trying to use their data, they find that elements missing, incomplete, inaccurate, poorly formatted, spelled incorrectly, and outdated. Problems arise when they try to promote this data and any resulting insights to the business when it is full of errors and impossible for people to trust.
As an essential first step, businesses must find ways to both clean and keep their data current through their systems. Though this step is time-consuming and can be expensive once people within the organization start seeing useful insights, they will begin to understand the return on investment (ROI). There is little point in investing in a bunch of systems and technology if the data feeding into it is wrong in the first place.
Maximizing your data is all about creating business value rather than a plethora of reports that nobody ever uses.
In the past, it was common for data to be left to the IT department to manage. However, to create a business asset, data needs to be far more than just something you collect and let the IT guys process and store. Managers in all departments need to know why information is vital to them. Ultimately, it is the business leaders who are setting the vision and strategy of the organization, so they need to help drive the data requirements as well. Every objective formed should be measurable and understood using data.
IT and BI teams won’t ask the same questions of data that the leaders in the specific department would. For example, a pricing team might want the ability to continually adjust the price points of their products based on real-time sales information. Marketing teams need to know how their campaigns are performing across many different variables daily.
If the right groups can see valuable insight into their area of the business, everyone benefits. More information will empower better business decisions. The challenge is then how you decipher meaningful information from clutter and move away from “gut feel” to data-driven decisions.
To get to that data-driven decision culture, organizations need employees with the ability to analyze, interpret, and communicate what they see in data. It is the data ‘storytelling’ part that is crucial to decision making. For example, if it matters why you sold 100 units of Product A today and only 50 the day before instead of asking the sales team, you may want to ask the data analysts. In some cases using data to identify the root cause behind your performance can provide the most granular picture of the situation.
For employees, this means that they need to learn skills that they may have never previously required. While they don’t want to overwhelm users, companies will benefit from allowing their employees to immerse themselves in data and experiment with it. Many will do this by utilizing a BI platform such as Tableau, Qlik, or Sisense, to name a few (there are hundreds on the market now). These tools allow users to slice and dice data as they see fit and find key insights to make decisions without the need for technical knowledge (you would need a developer to help build it, but users don’t need to be technical).
The data strategy
It would be impossible to create a data-driven culture overnight, and you need to be guided by the overall business strategy. Clear business strategies and key performance indicators will help people identify the type of data they might use to deliver answers to the core business questions. The majority of businesses that benefit from the use of data have use cases that solve a problem. One of the best examples in recent years is Netflix. They used data to understand how customers wanted to consume entertainment, answered a genuine question, and quickly put their competitors, such as Blockbuster out of business. It took them over ten years to achieve this, but they are now the firm market leaders in their sector through a well thought out strategy.
That said, many times, there is a need to get some quick wins and return on investment to give your team a reason for investing in and embracing data. For example, maybe you want to make your business processes more efficient. Using data can be a great way to get business buy-in early on. A Sodexo Workplace Trends Report highlighted an insurance company who discovered their employees were 20% more productive when working from home. They were able to institute a new work from home policy that benefitted both them and their employees.
As businesses embrace data along with all its forms a scope, more people will become data literate. In turn, organizations benefit from their people having the ability to create insight and make valuable business decisions based on evidence. Long gone are the days of doing things on “gut feel” alone. People need to be confident that they are doing the right thing. If you can unlock confidence, the benefits could be vast as the big technology companies are proving, having entire business models founded on data.