A surprising number of organizations that are trying to harness the power of big data are making big mistakes, according to a recent report from the Economist Intelligence Unit. Many are even doing the opposite of what they should do.
“Developing a corporate culture where data is embraced is the critical first step toward becoming data- driven, more so than the more common path of focusing initially on technology and tools,” according to the report, The virtuous circle of data: Engaging employees in data and transforming your business. (For people who do better with pictures, some of the data is also available in an infographic.)
But that’s the problem many companies have, according to the report. First, they tend to focus on technology and tools. Second, they then focus on acquiring the right talent and expertise. It is only after those things have been acquired that companies work on developing the sort of corporate culture where data is embraced and applied day-to-day.
Instead, what would better serve organizations would be an earlier focus on leadership and culture—essentially, a reversal of these stages. The report, which included a survey of 362 executives, found that the most effective ways to drive employee engagement and adoption of data are:
- Leadership by example (with 58 percent)
- Training and education (48 percent)
- Compensation and performance incentives (43 percent)
“A strong vision and momentum from the top of the organization are critical to transforming a business’s culture into one that embraces data and facts as the primary basis for business decision-making,” notes the report. “There is no replacement for a CEO with a vision and a personal mission to inspire and instill a culture that looks for data-driven insights and works on facts-based decision-making.”
As an example, companies that outperform the competition are much more likely to have leaders who spearhead data initiatives and lead by example. In addition, such companies are less likely to be challenged by a lack of leadership commitment to the data strategy. Similarly, 53 percent of executives said data initiatives most commonly flowed top down into their organization.
Employees are also most inspired to use that data when it is easily accessible, understandable, and usable, the survey reported. Data-driven companies were much more likely to agree that all their employees have access to:
- The data they need (41 percent vs 9 percent of the rest of respondents)
- User-friendly tools to conduct relevant data analyses (26 percent vs 5 percent)
- Customizable data feeds and dashboards (29 percent vs 7 percent)
“As a result, data-driven businesses are much better at conquering the ultimate challenge: extracting relevant insights from data and applying them to their daily business (36 percent vs 11 percent),” the report notes.
Unfortunately, right now, only 25 percent of executives surveyed agreed that their employees were able to readily extract relevant insights from the data available to them. Ironically, financial chiefs indicated they were especially data poor.
It’s also important to acquire the right talent and expertise, because it’s only through skilled personnel that organizations can figure out what to do with all the data they’re collecting. “A common, critical missing link is having the ability to think about the data in new and scientific ways, to connect data insights with the goals of the business and evolving needs of the customers, and to illustrate and communicate to the broader organization the meaning and impact data can, and will, have on their day-to-day work and performance,” the report notes. “Making these links requires skilled personnel.”
The result is an organization that’s more successful, the report found. “Data-driven” businesses, which always use data for business decisions, are 68 percent likely to say they outperform their competitors in profitability, vs 40 percent for “data light” businesses, which only sometimes or rarely use data for business decisions. This also results in:
- Better knowledge sharing (70 percent vs 41 percent)
- Superior risk management and operational efficiency (67 vs 43 percent)
- A more collaborative organization (55 percent vs 24 percent)
As a result, data-driven businesses are more likely to say their cultures are creative and innovative (78 percent vs 37 percent).
Most important, it is critical that C-level leadership be open to being wrong, based on the data, the report emphasizes. Executives need to be “committed to discovering the truth through data and facts if they are to create a data-driven business and lead it to outperform the competition.”