Data and analytics must become part of any business’s DNA to ensure transformative decisions and strategies that foster competitiveness and increased profitability. However, establishing a data-driven culture is no small feat.
A data-driven culture should originate at the executive level and filter down to all employees, but adoption is only possible if a value realizes. CFOs and COOs, as the primary owners of internal systems and data, are usually tasked with the responsibility of maximizing the value of data and analytics in an organization.
These roles comprise a deep understanding of the business, numbers and strategy, enabling them to lead with data analytics strategies and priorities. They are also responsible for data governance and literacy, ensuring that the entire organization is aligned and that the value of data is woven into every business process.
How A Data-Driven Approach Benefits Business
Data enables organizations to see new trends, explore areas and clients, and adjust decisions with reliable information backing changes and decisions, such as:
- Revenue growth. By working through all sales information, businesses gain an understanding of how each product or service is doing, what adjustments are necessary to improve performance, and where to focus future business strategies based on the data trends revealed.
- Budgets and processes. History allows organizations to be accurate in their budgeting processes, from costs to revenue stream to staff efficiencies to seasonality. By analyzing product and service trends, it is possible to adjust spend accordingly and ensure money spent will enable an ROI.
- Pre-mortems. Information and data allow businesses to consider previous risks and lessons, and to share those much earlier in the processes. This drives strategic decision making based on data, not assumptions.
- Creating efficiency. From billable hours to cost drives to expenses, data allows for a proper analysis of where drains are occurring in the business and how to fix them. Data enables organizations to take the guesswork out of strategies and drive strategic decisions that will ensure results from the onset.
Are You Data-Dependent Or Data-Agnostic?
Every organization wants to be innovative and disruptive with a data-driven culture. However, a few decisive factors can highlight whether you truly are a data-driven culture — and it is much simpler than you might think. Should all the available data in your organization disappear for two weeks, what would the impact be? Would you continue with business as usual and make do, or will the missing data have a drastic effect on your operations and decisions?
If you cannot function effectively without access to your data, then you are building a data-driven culture. Consider lead nurturing as a data-driven marketing process. It would need to integrate with sales, account management, finance, operations, development and every other department. One outcome in the marketing process needs to be the input of another outcome in a sales process, and one outcome in a sales process needs to be the input of another outcome in a finance process, and so on.
A data-driven culture requires an understanding of the data needed to make decisions based on the outcome of a data set. Therefore, a solid foundation is required to drive insights that are easily understood, accessible, integrated and useful. Most of all, the data needs to be trusted, highlighting the need for good data governance.
Foundations Of A Data-Driven Culture
To ensure a data-driven culture, organizations need to continuously drive:
- Strategic insights and foresight. Analyzing data and insights should form the cornerstone of decision-making processes, and happen prior to, not following, a decision. Data helps predict outcomes based on trends. People tend to look at past results to see progress instead of using it to predict trends and improve decision making. Organizations with a data-driven culture, however, need to ensure that data comes first.
- Data-driven decision making. Organizations need to create a culture where data and analytics are operational and applied to all decisions within the organization. It is crucial to consider what data is available and what is missing and to establish processes accordingly.
- Data accessibility. All roles in an organization require transparent and correct access to the data required for that role.
- Clear output and metrics. The business impact contributed by data and analytics requires continuous measurement through a set of KPIs.
Data culture matters and will enable even bigger transformation and revolutions than those we are currently experiencing. Organizations are increasingly adopting technology to predict outcomes and build business strategies on analytics, thereby, reducing risk, increasing buy-in from stakeholders, and increasing competitiveness.
McKinsey research suggests that the gap between leaders and laggards in data analytics is growing. What side of the gap are you on?