Whether you realize it or not, your life is already driven by data. Recommendation engines drive your daily entertainment choices, social media affects your decision-making and so on. The question is whether your company is as data-focused as you are. If it isn’t, it should be. Here’s why:
What ‘data-driven’ really means
The use of data in a corporate sense creates an operating environment (e.g., recommendation engines or social media feeds), similar to our personal decision-making environment, that uses past choices and preferences to leverage values, boost productivity, enhance corporate efficiencies and improve overall effectiveness.
Put another way, your company’s strategic decisions should be based on research, data analysis and interpretation, coupled with market reports and “traditional methods.” And it should involve your whole company, not just the head office or C-suite. In a genuinely data-driven company, the work of every department is driven by the reality of its data. When that combined work effort pursues the goals and objectives of the larger enterprise, then the entire organization benefits from the focus on and clarity of a data-directed vision in all of its parts.
The importance of being data-driven
Why should companies seek to be data-driven? The short answer is to maintain competitiveness in an increasingly competitive global market.
The volume of available data is growing by the second ( to an estimated 175 zetabytes by 2025), and it is becoming increasingly granular in its information. Just one segment, the internet of things (IoT), is streaming data 24/7, filling corporate data stores with precise, accurate and actionable data relevant to every corporate activity and process.
Data centers, the cloud and intermediate data processors such as cell towers and substations all contribute growing volumes of data to vast data oceans. Companies that use that information to its maximum value will enjoy a significant edge over those that don’t.
The longer answer? Fortunately, the benefits of becoming a data-driven enterprise more than make up for the energy that will be consumed by achieving that goal:
- From a nuts-and-bolts perspective, using data to enhance core competencies can improve both efficiency and effectiveness. Data analysis reveals bottlenecks, excesses, duplications and waste and often suggests the remedies to those challenges. Making the changes can improve function and reduce costs.
- Data can also suggest new opportunities for revenue growth. Tying corporate data to market trends can direct production decisions to generate new products and services in response to those trends. It can also reveal which products and services are no longer viable so the decision to terminate those systems can be made with confidence.
Using data as the driver for forward momentum results in a leaner, meaner, more agile organization that can pivot when appropriate to maximize both its internal resources and external opportunities.
How to become data-driven
In my experience, transitioning to become a data-driven organization requires a corporate cultural change, management alignment and a well-defined strategy that is reviewed and adjusted periodically.
1. Overcome the cultural conundrum
In many companies, “legacy” processes and systems are still in use, and workers are still using the same legacy-level tools and skills. Worse, data reveals that those same systems are often barriers to any kind of change, as workers and leaders cling to what they know best. Overcoming those cultural barriers is necessary if your organization is going to truly embrace becoming data-driven.
- Build a data-driven enterprise
The first step is to identify where in the organization cultural barriers exist, whether it’s outdated machines or, the more significant challenge, entrenched beliefs and customs. Your strategy should include investments and activities directed at remediating those challenges.
On the digital side of the strategy, some fundamental steps lay the foundation for a genuinely data-driven future:
- Create your corporate “single source of truth” (SSOT). This concept assumes that actionable corporate data is accurate and trustworthy and can be used as a reliable base for all company decision-making. Many leaders believe their organization already works from an SSOT but haven’t done the work to determine if that is true. In reality, any company that still runs its operations in silos, for example, most likely doesn’t have an SSOT but instead has a different SSOT for each silo. The resulting confusion can be both wasteful and costly.
Building an SSOT for the entire organization requires input from all corporate sources and a repository for the database that is accessible to everyone (also known as “data democratization”).
- Develop data literacy across all sectors of the organization. Working with data means working differently, and many employees may not have the skill set needed to become fully data-savvy. Developing data literacy across a whole enterprise requires the simultaneous development of several key factors. The first is the development of training materials and courses to ensure all workers gain the knowledge and abilities they’ll need to implement the new work structures. Investments here will pay off over time.
Note, too, that training standards will change based on who’s being trained. Frontline workers need different skills than middle and upper management, who will also need to integrate data from both below and above their position. That, too, will require training.
New tools are also necessary. Obviously, digital tools — machines, software, on-prem, cloud or others — will replace many legacy versions. Skill building and testing will ensure the maximization of these resources once the fully data-driven organization becomes operational.
- Be prepared to embrace advanced technology
The digital revolution will overhaul your overall organization more than any individual asset. Be sure to plan for that and for the increasing agility your agency will gain as a result. Additionally, it will be important to plan for IoT, as it will generate corporate-specific data that will become the foundation of business decisions.
While it will take time and money to set your organization on a data-driven path, once you’ve established the necessary culture and foundation, you can make much more informed decisions.