“Making data available and easy to use for all employees can transform an organization’s culture. It’s good for the company’s bottom line”
Elissa Fink, Chief Marketing Officer at Tableau Software
Data-driven companies outperform peers financially
Increasingly, evidence is surfacing that certain organizations are looking to transform their cultures to become more data-driven as a source of competitive advantage – and it is working. A new global survey conducted by the Economist Intelligence Unit and sponsored by Tableau Software finds a clear link between the presence of a data-driven culture and financial outperformance.
The survey of 530 global executives spanned every region of the world and nearly all industries and found that more than 80% of them believe that employees across their organizations should use and understand data in their decision making. These executives also provided some compelling anecdotal evidence that these efforts are having an impact on their bottom line. Specifically, companies are more than three times more likely to rate themselves substantially ahead of their peers in financial performance when they rate themselves substantially ahead in their use of data.
How can you replicate their performance? The survey provides several insights that may lead to enabling your very own data-driven culture.
Data collection was ranked as “very important/essential” by 76% of the executives from top performing companies as opposed to only 41% by their laggard counterparts. It is quite simple actually. In order for something to become ingrained into an organization’s culture it must be easy to adopt. Asking already stretched resources to hunt down and mash up data from different sources across the globe and departments is a nonstarter. A strong data collection strategy aimed at enabling decision making is absolutely essential.
Our advice – Start by asking yourself and your executive team “what decisions could we make if we had all of the relevant information?” This line of thinking then yields itself to identifying business opportunities and only then considering how a data model with only the right data inside could help to improve performance.
Share Your Data
Your data is in heavily defended silos guarded by divisional heads. More than half of the executives from top performing companies rated the promotion of data sharing as very important to developing a data-driven culture. Still, only 30% of these executives attributed reluctance by department heads as the cause for failure to promote data sharing. Instead, concerns over privacy, security, (37%) and technical expertise (47%) seem to be a larger hindrance to realizing a data-driven culture.
Our advice – Centralizing data collection has several important benefits. First, it allows senior executives to overcome departmental barriers quicker through a mandated approach. A centralized data collection strategy also allows for tighter control over access to data considered private or confidential. A focus on training employees the technical and analytical skills to properly access and interpret data is also essential.
Start at the Top
When it comes to promoting a data-driven culture the single largest factor that proved successful was top-down mandates and guidance. Half of all respondents and two-thirds of executives from top performing companies noted the importance of C-level sponsorship and leadership.
Our advice – Changing a culture isn’t easy but given the strong link between a data-driven culture and financial performance it is worth it. We talk a little about what a data-driven culture is and how to influence it in our article “What is a Data-Driven Culture?”
Is My Data Big?
Few buzzwords have caused more confusion for executives than the term “big data”. Not surprisingly, the survey revealed a striking variance in the size of data sets they would qualify as “big data”. Fifteen percent defined a gigabyte as “big” while thirty-six percent put the threshold at a terabyte. The bottom line is that there is limited correlation between financial performance and the size and type of data that companies use. Making slightly more use of new and fast data such as social media and web tracking gave top performing companies a very small edge in the rankings.
Our advice – According to Gartner, “Big data is high-volume, high-velocity and high-variety information assets that demand cost-effective, innovative forms of information processing for enhanced insight and decision making.”
In other words, the size of data may very well be an important attribute requiring specialized techniques to analyze, but it does not differ from “traditional” datasets when it comes to the transformative power it can have. Consider size, but focus on how to use data for decision-making first. You can spend a lot of time, money, and effort on developing an analytics platform that is “big”, but focusing on the “right” data will likely yield a much higher ROI.
Our Bottom Line
Increasingly, organizations are using their vast stores of data to unlock value previously hidden in silos. These organizations are using their data-driven prowess to achieve financial
superiority dominance over their competitors. These “gold mines” of data do not necessarily have any intrinsic value, and there is little evidence to suggest that the larger the “mine” the more productive the organization is at unlocking value. A number of value-added processes turn this data input into a finished good. Data collection, processing, analyzing, and decision-making turn the data into information that informs critical business judgments.
Our clients recognize that in order to use data to achieve a competitive advantage they must focus on all parts of the decision-making value chain. At Dimension Alpha, we believe this holistic approach goes far beyond typical IT outsourcing models. We will build you a Data Warehouse to facilitate data collection or provide shared Reporting and Dashboards, but we will always be mindful that these tools are only part of enabling a greater goal – transforming organizations to become more Data-Driven and achieving financial Dominance.