Becoming A Data Driven Organization

Making data based decisions makes instinctive sense, and evidence is mounting that it makes strong commercial sense too.  For instance, the McKinsey Global Institute indicate that data driven organizations are 23 times more likely to acquire customers, six times as likely to retain those customers, and 19 times as likely to be profitable as a result.

Whilst being aware of this kind of potential is undoubtedly valuable, knowing it and doing something about it are two very different things.  So how do you go about becoming a data driven organization?

Starting With Why

As with many technology driven change projects, the failure rate for those on this journey is considerable.  Indeed, a recent report from EY reveals that whilst 81% of organizations support the notion that data should be at the heart of everything they do, the vast majority continue to keep data in silos, thus strangling their efforts at birth.

So how do you do it better?  I spoke recently with Mario Trescone, Senior Director of Business Intelligence and Data Analytics at YMCA ahead of his presentation at the Business Intelligence Innovation Summit, and he said the key first step is to understand why you're looking to be data driven.

“Organizations need to spend time asking themselves why they need data or perhaps why now vs yesterday?” This simple question should trigger an avalanche of follow up questions, all of which need to be answered and thought through thoroughly.  What events triggered them to seek tools and/or resources to begin utilizing data/information?  The reality is many organizations rush to get the necessary BI resources in place without taking the time to ask themselves how will BI fit into the culture of the organization (using data effectively will more than likely change the culture on all fronts so be prepared), the role the BI function will play in the decision making process, where will this function reside and why (reporting structure), how will this impact the role and function of the other departments.  These answers to these questions will allow for at least an initial first draft of what will eventually be deemed as their Data Governance policy.”

The EY paper suggests that for most organizations this desire will be to better understand one's customers and to improve products and services.  From this core need, you can then begin to implement your strategy.

Overwhelmed With Data

It's tempting to think that our organizations are struggling through a lack of data, but the reality is that most of us have more than enough to make insightful decisions, but the data is poorly managed and exploited.  Researchers at MIT regard this as the base of your pyramid, and it consists not only of well managed data, but also a firm commitment from leaders to become data driven.

Trescone advocates having a central data nucleus of expertise to ensure that common standards, methods and tools are used for the collection and management of data, whilst also increasing the likelihood of business intelligence having a board level presence that underpins the data driven decision making in the organization.

This then allows for localized delivery to ensure that insights are available to employees when they need it.  It's only at this stage that data becomes a key asset for your organization, underpinning your strategy and deepening engagement with customers.  The peak of the pyramid then allows you to take your newfound data capabilities and fashion new business models and chart new territories.

Dull But Important  

Before those lofty heights however, you have to ensure your base is right, and this is the kind of mundane job that many organizations overlook.

Conducting a simple data inventory is often a job that executives are loath to embark upon, resulting in a bunch of data left to rot away in silos.  Doing this work also allows you to focus on the prickly issue of security and compliance.  Regulators on both sides of the Atlantic are cracking down on companies who hold personal data, with potential penalties of up to 5% of global annual turnover.

As you can see, compliance is no laughing matter, and many firms are turning to Chief Data Officers or Chief Analytics and Insights Officers to oversee this and other data issues.  Indeed, regulators now require a Chief Data Protection Officer for any company processing more than 5,000 personal records per year.

A Data Driven Culture

Once you've ensured the data is of the right quality, you can set about ensuring that it's used to deliver timely insights when staff need it.  This is where your previous efforts will really pay off, as EY reveal that data quality is a major hurdle to overcome if employees don't quickly become turned off.

This is especially so when it comes to newer data sources such as social media data.  This is where developing the right data skills within your organization is so important.

Data from CrowdFlower recently showed that 83% of organizations are struggling to meet the data skills requirements they need.  Similar findings were revealed in a study by Gartner.

Couple this with identifying the right technologies (and then implementing them successfully), and you could easily argue that the last step is the hardest.

“Companies need to take the time to ensure they are hiring the right individuals to appropriately manage the business intelligence functions within their organizations.  Yes, having trained analytical professionals is a core part of the process, but building a team with actual business experience is equally critical to appropriately turn the analysis into actionable insights to guide the decision making process.  I will also add, a background in a social science discipline can prove to be valuable to connect the data with human factors / consumer behavior.  At its core, BI are Solution Engineers, understanding the cause and effect of all factors surrounding an organization from how it operates internally (decisions made, resource allocation, etc.), to the market conditions and how both intersect to the consumer,”  Trescone says.

About the author

Adi Gaskell is a free range human who believes that the future already exists, if we know where to look. From the bustling Knowledge Quarter in London, it is his mission in life to hunt down those things and bring them to a wider audience. He is an innovation consultant and writer, and the author of The 8 Step Guide To Building a Social Workplace. He has worked across private and public sectors, helping organizations discover fascinating projects and work from around the world to help trigger the innovation process. With a post graduate degree in computing, his posts will hopefully bring you complex topics in an easy to understand form that will allow you to bring fresh insights to your work, and maybe even your life.