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A Data Driven Organization: How to Build it in 3 Essential Steps

The need to create a data driven organization has never been more important, and in more demand, than it is today.

An increase in the demand and need for data is welcomed by organizational leaders who have already embraced data analytics as a practice and have a data driven culture. But for leaders and companies that have not, now is the time to consider how they will (not may) become a more data-informed business. If data analytics is new for your company, or if you want to take your use of data analytics to the next level, there are foundational steps you must take to succeed in building a data analytics strategy.

 

This article was written by QuantHub contributor, Jennifer Burnett, Ph.D., with Caliber Talent Solutions

 

A Data Driven Culture Is Not Just About the Data

Many companies are leveraging sophisticated data analytics to make critical decisions about customers, products, finances, operations, marketing, and talent.  These companies have been particularly prominent in industries such as financial services, pharmaceuticals, technology, healthcare, retail/sales, manufacturing, and advanced industrials. Interestingly, PwC reported in its 2019 Annual Global CEO Survey not much has changed in terms of strategic use of data in the last 10 years despite the advances in data analytics and AI technology.

When comparing survey responses from 2009 to 2019, the critical business areas needing data insights were the same, but gap in the comprehensiveness and adequacy of the data in those areas remained unchanged.  (Figure 1) CEOs attributed this prevailing gap, not to data accessibility, quantity, or technology, but to the ‘lack of analytical talent’ (54%), followed by ‘data siloing’ (51%), and ‘poor data reliability’ (50%).

Executives in data-driven industries understand this must change. In a recent study by New Vantage Partners, executives reported placing a high importance on advancing their data and analytics practices in order to continue to compete in their industries. Competing against digitally native companies who started off by using advanced analytical capabilities is highly disruptive and could mean the demise of a business if they can’t keep up with customer demands, operational efficiencies, attracting/keeping talent, or other potential risks. (3)

 

The primary barriers to becoming a data-driven organization,

according to over 90% of data executives are people and processes.

 

In other words, technology, resources and data quality are necessary, but not sufficient elements of a strong data analytics practice. So, how do you create a data driven workplace? We’ve defined three critical principles.

 

Figure 1

Critical business areas that need data and analytics. A gap persists in data that is needed to make data driven decisions among several critical business areas.

Three Principles to Building a Data Driven Organization

How do you become a data driven? Here are three important hallmarks of teams that use data to increase impact and efficiencies. These teams:

  1. Cultivate Data Inspired Leaders
  2. Build an Analytics Mindset
  3. Encourage Collaboration and Curiosity

 

Cultivate Data Inspired Leaders

Becoming a data driven organization requires a business and cultural transformation.  This transformation involves a shift in beliefs, values and behaviors.  These may include but are not limited to managing data as an asset, valuing data-based outcomes, and believing that incorporating data into decisions and processes will have a positive impact on the success of the company.

Real change starts with awareness of a need to change, a desire to change, and a belief that by making a change a new, better state will be achieved.  Support and buy in from executive level leaders is essential.  According to various studies and reports, (1, 2, 3) CEOs and executives understand and place value on big data and data analytics, but many are not successfully operationalizing it in their organization.  Leaders who can demonstrate the value proposition of building a data driven organization, are often the catalyst needed to move ahead.

For larger organizations in particular, there is a growing trend to create a Chief Data Officer position.  Over the last three years, according to the New Vantage Partners survey, more executives (48.5%) are looking for a CDO to come from outside the organization and be an agent of change.

Figure 2

72% of data leaders said they have not yet developed a data culture.

The initial role of the CDO or any data-inspired change leader, is to present a platform for the need and desire to change. That awareness and desire are the foundation for the value proposition.

Next, leaders can influence others by demonstrating how, by making this shift, the organization will benefit.  The key is to understand clearly the needs of the business and how leveraging data can address key challenges or help achieve critical goals.  These priorities are often focused on gaining competitive advantage in the market, retaining customers, growing revenue, and gaining operational efficiencies.  Targeting a specific business need and demonstrating how using more advanced data and analytics can help to solve that problem provides the groundwork for expanding the belief in, and adoption of, data driven practices.

Of course, anything new may create reactions of fear or resistance, which is true when there is an increased reliance on and use of data.  There is often a fear that more subjective human intuition, discretion and judgment will be replaced by objective data. It is natural for people to want to just go with their “gut feeling” or stick with “the way things are done around here”.  They are not sure what the data may reveal and whether or not it will support the direction they want to go.  The more data and analytics are presented as tools, a compliment to, and/or a way to gain insights, rather than a replacement for opinions and judgment, the more likely it will be adopted.  Leaders play a critical role in helping people feel comfortable with this new approach and communicating how the future state will benefit, not harm, employees and the organization.

 

Build an Analytics Mindset

While having data inspired leaders will establish the foundation for a data driven culture, an analytics mindset must spread throughout the organization to grow and sustain the culture.  Early data leaders and teams become essential change agents helping the entire organization view challenges, processes, and goals differently.

Organizations who are committed to developing an analytics mindset across the organization can accomplish this by addressing aspects of organizational design and upskilling employees in both technical and non-technical competencies.

There is not necessarily a one-size-fits-all model for designing a data focused organization.  However, there are certain skill sets that are important to have as you are building a new organization-wide analytics mindset.  A Gartner 2019 report on “Building a Data-Driven Enterprise” defines key competencies for both a centralized data team, such as one that reports to a Chief Data Officer, as well as decentralized roles and skills that are needed throughout the organization.  It is also important, according to Gartner, to balance tactical and strategic activities and responsibilities. (Figure 3).  It is easy to get stuck in the tactical role of generating reports and dashboards that may not have true impact and value to the business.

Figure 3

Operating model of a data and analytics organization. The balance of a strategic and tactical approach to data analytics.

For an analytics mindset to grow, and a data driven culture to flourish, the skills and competencies cannot be isolated to one part of the organization.  Being able to manage and analyze data may be very specialized, but the process of interpreting and applying results benefits from multiple inputs.  This is when the line between data experts and business experts begins to blur.  Data analytics without business impact is not insightful, and business leaders who fear or don’t understand the data will simply not value its use for decision making.  As a result, an analytics practice and mindset will not survive if it operates separately from the rest of the business. (2).

Leaders can accomplish this either by bringing the data experts closer to, and even embedded into the business and teaching them about the business itself, or by upskilling business experts to be more data fluent.  Ideally, some type of hybrid model may work best.  During this transition some organizations find they need a ‘translator’ type role, or someone who can bridge the gap between data and business experts.

A recent Harvard Business Review (2019) suggests that educating everyone is necessary to ensure adoption of an analytics mindset (1). Companies may offer training for all types of employees from leaders, to end users, and those in between.  Building knowledge and data capabilities in the workforce is an essential step for driving and sustaining the shift to a data driven culture.

 

Encourage Collaboration and Curiosity

Even with elements of developing an analytics mindset in place, it is the practice of using data, solving problems, sharing ideas, and overcoming challenges that will feed and develop a data-driven culture.  The actions that lead to a strong and lasting data driven culture involve encouragement of collaboration and curiosity.

Analytics is a team sport and collaboration is necessary for it to succeed.  You don’t need ping-pong tables and free lunch to encourage collaboration, but you do need to make collaboration, especially for virtual teams, simple, frequent and rewarding.  At first collaboration may be very intentional, such as cross-functional projects, brainstorming sessions, or even peer mentoring.  Over time, with support and reinforcement, collaboration around data and analytics will happen regularly and naturally and become a key component of the culture of the organization.

One of the first steps towards more collaboration is simply providing access to data at all levels of the organization, also known as data democratization.  In the 2020 Global State of Enterprise Analytics Report, for the U.S. respondents, 81% of executives and managers had access to data, while only 44% of frontline workers had access.  It was also reported that there would be greater adoption of analytics if more intuitive tools and training were available, analytics were embedded into other applications, and visual displays of analytics were more accessible.

Figure 4

 

As collaboration and connection grows, it’s fueled by natural curiosity. As children and young adults our curiosity is encouraged and rewarded as we learn new things about the world around us.  Data analytics is also a process by which we are we are learning something new. Often by exploring new areas, solving a unique problem, or trying to better understand a situation.  There are many unknowns, and many possible approaches, therefore having the freedom and desire to ask tough questions and investigate different scenarios is as much of an art as a science.  That artistic approach begins with a strong desire to know and learn – that is curiosity.

In summary, building a data driven organization starts with leaders within the organization who recognize the value of data and analytics. As business leaders build a data driven culture the tactics and tools vary, but the outcome is a high-performing workplace making data driven decisions and increasing impact and efficiencies.

 

 

 

References

  1. Harvard Business Review, (2019) The AI-Powered Organization: The main challenge isn’t technology, its culture. Fountaine, T., McCarthy, B., Salah, T., Vol. 97 (4), July-August https://hbr.org/2019/07/building-the-ai-powered-organization
  2. Harvard Business Review (2020) 10 Steps to Creating a Data Driven Culture, Waller, D, February. https://hbr.org/2020/02/10-steps-to-creating-a-data-driven-culture
  3. New Vantage Partners (2020), Big Data Executive Survey,
  4. Gartner (2019)10 Ways CDOs can succeed in forging a data-driven organization https://www.gartner.com/doc/reprints?id=1-1ZM4VXMV&ct=200804&st=sb
  5. PwC, (2019) Annual Global CEO Survey https://www.pwc.com/ua/en/press-room/2019/global-ceo-survey.html
  6. MIT Management Sloan School, (2020) How to build a data analytics dream team. https://mitsloan.mit.edu/ideas-made-to-matter/how-to-build-a-data-analytics-dream-team
  7. MicroStrategy, 2020 Global State of Enterprise Analytics Report

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