Why Organizations Need to Be Data-Driven (Part Two)
The roadblocks that inhibit organizations from becoming data-driven—and suggestions for overcoming these challenges
This second post on “Why Organizations Need To Be Data-Driven” reveals some of the challenges of becoming data-driven and how organizations can overcome these challenges to become truly data-driven. It’s a must-read for business owners, entrepreneurs, corporate enterprises, and just about anyone who wants to understand how organizations can become data-driven.
Introduction
Welcome to the second part of my publication on “Why Organizations Need To Be Data-Driven”. If you’ve not read the first post where I talked about what data-driven means and why data is essential for every business, please click this link to read the article before proceeding.
While I was drafting the first part of this publication, I thought it’d be nice to talk about some of the challenges of becoming data-driven and not only discuss how organizations can become data-driven. I found that particularly important because unless organizations discover and tackle some of the barriers I’ll mention in this post, it might be tough to become genuinely data-driven or make effective data-driven decisions.
In this new post, I’ll touch on some of the roadblocks that inhibit organizations from becoming data-driven and offer some suggestions on overcoming the challenges to truly becoming data-driven (regardless of business type, niche, or industry).
Challenges of Becoming Data-Driven and How to Truly Become Data-Driven
Although data is a valuable resource that could be beneficial to your organization when used effectively, becoming data-driven is easier said than done and often comes with its own set of headaches. According to this recent survey from TechCrunch, 72% of big organizations haven’t been able to create a data-driven culture — the majority of these organizations face several challenges that often disrupt the successful implementation of a data-driven strategy.
After reviewing several research materials, thinking through my experiences, and reviewing the opinions of thoughtful leaders in the data space, I’ve identified the following as some of the common challenges organizations encounter and need to overcome or avoid to ensure that their data-driven decision-making efforts and capabilities aren’t compromised or hampered.
PS: I also included possible ways to overcome each of the challenges.
Lack of Data Infrastructure, Tools, and Skillset
In the past, most companies only stored and analyzed very little amounts of data such as legal documents, financial records, and more from their business. But with the drastic acceleration in digitization and velocity of data generated today, modern organizations are usually swamped with massive data streams, and it’s impossible to effectively store such huge data volumes using the traditional database systems and infrastructure that worked for small data volumes in the past. As you can imagine, the velocity and volume of data generation would continue to rise. In this post, International Data Corporation (IDC) even predicts that the world data will grow to 175 trillion gigabytes by 2025.
I stand to be corrected, but I firmly believe that modern-day organizations don’t lack data. However, what the majority of organizations lack is the infrastructure and underlying tools needed to effectively store/manage the growing data velocity, volume, variety, and complexity for better business utilization. At times, some organizations end up investing massive amounts of money in tools/infrastructure they hardly ever needed simply because they didn’t have the right experience to select the appropriate tool suitable for their business. The main point I’m trying to pass here is that even though data is a business gold mine for every organization, you can’t truly unlock its full potential if you don’t have the right data infrastructure, tools, solutions, skill sets, governance framework, and processes.
As such, every organization needs the right expertise or skills to evaluate their data readiness, set up data governance policies, select the appropriate Business Intelligence (BI) tools, Data Storage and Management tools, Cloud Solutions and Services, e.t.c that suits their organization’s need from amongst the myriad of tools and infrastructure that exist in the market today. There are two major routes for developing data-related competencies in every organization: you can either set up a dedicated data team or hire a data specialist to properly guide your organization on the journey of becoming data-driven and setting up the right infrastructure (IMO, the choice is entirely up to you and varies from one organization to another).
For instance, if your organization doesn’t have enough budget to set up a data team, a good way to start would be to work with a data consultant and eventually scale with time. Once you engage the appropriate data specialist or invest in setting in a data team, it would become easier for your organization to ensure data integrity and quality, train other team members on the importance of leveraging data for business decisions, the possible data points available, where the data is stored, how to consume the data, what tools are available for use, etc. In a way, this would also help to foster a good data culture and improve data literacy in your organization.
Lack of Data-Driven Culture and Organization-Wide Buy-In
Another challenge that stands between organizations and becoming data-driven is the lack of data-focused culture, which usually manifests itself in different forms for both new, small companies and the larger organizations. Usually, the lack of organization-wide buy-in could result from stakeholders’ indifference, outright resistance to making decisions based on data, personal prejudice, biases, and more. In this survey by EY, 47% of respondents mentioned that it’s challenging to adapt organizational culture to integrate big data.
This challenge is usually more pronounced in large and relatively old organizations with already existing organizational cultures and practices and leaders who believe they have the business knowledge and insight needed to drive business growth even without looking at data. In some cases, these larger organizations go as far as investing and setting up data infrastructure and teams even though they’re not sure about how to appropriately adapt and integrate a “data-driven” mentality into their company, the capabilities of a data-driven approach, or the data team in solving business problems. Startups and new companies are a little more dynamic, but they’re also not left out in the struggle. This 2021 statistics from Havard Business Review reveals that some organizations are struggling to make progress and losing grounds on forging a data-driven culture, using data to drive innovation, and managing data as a valuable asset.
The struggle to adopt a data-driven culture is REAL and becoming a data-driven organization takes more than the right business strategy and technology. I believe that it always starts at the very top, and every company needs prominent leaders and stakeholders who can change the organization’s culture by preaching, practicing, and advocating for a data-driven culture in the company, within themselves, and amongst employees. Usually, these data advocates should always lead the way, spread a data-driven approach to every corner of the organization, go the extra mile to show the value of data, and enlighten business owners about the perks and far-reaching effects of data-driven decision-making. Without the leadership for a data-driven approach, it might be challenging (if not impossible) for an organization and its employees to truly adopt a data-driven culture.
To take things further, organizations should encourage employees at every level to experiment with data, ask data-driven business questions and act based on their insights. Rather than asking employees to keep their heads down and proceed with business in the usual fashion, you should empower everyone to stay curious and share their insights. Additionally, the key decision-makers in your organization should always be willing to receive employee suggestions as this plays a massive part in making everyone very conscious and encourages people to incorporate data into their everyday work and life. I like the way Gartner puts it in their post: “Data can only take an enterprise so far — the real drivers are the people.”
In summary, you shouldn’t build an organization where only business leaders or employees alone support the data-driven culture. Although it takes a lot of time, effort, and commitment to build and adopt a data-driven culture and strategy, I believe that creating a data-driven culture is a very collective and inclusive process that should involve just about everyone in your company. That way, it’s easier to catalyze substantial shifts in company-wide norms, reinforce the usefulness, importance, and power of data in your organization.
No Strategy Before Data Collection and Usage
Becoming data-driven doesn’t just happen by accident or coincidentally and because data is ubiquitous, organizations are more likely to get caught up in the web of collecting data without actually considering what they want to do with all the data. This is a challenging approach that often leads to data debts which prevent organizations from actually becoming data-driven and hampers their ability to truly use data to address specific business needs, generate real value, or reach their strategic goals. In some cases, business leaders and executives often underestimate the effects of data debt mostly because they don’t realize that it affects data-related initiatives and drags down broader critical investments and business operations in a way.
Rather than just collecting data without an idea of what to do with the data, organizations can avoid drowning in data by having a clear-cut strategy for data collection and usage beforehand. Although there is no one-size-fits-all approach for creating a data and analytics strategy, I believe that a good strategy should be centered on defining the business-critical questions that need to be answered and identifying the challenges that need to be addressed, evaluating your data needs and readiness, defining how data will be sourced, collected, secured and transformed into actionable insights, evaluating your technology infrastructure requirements, data competencies, and governance.
There’s a massive amount of information available on the internet today and without the right strategy, it might not be easy to identify and get the specific, exact pieces of data that will benefit your organization. This overarching idea of having a strategy before data collection is a fundamental element that applies to just about every aspect of human life. For instance, building a new apartment requires a proper plan and architecture to guide the project execution.
As an aside, organizations also need to create a more transparent world by understanding and adopting the right privacy regulations and rules specified by GDPR agencies. This helps to bridge the increasing mistrust gap between businesses and customers, the risk of market manipulation, invasion of privacy, monopolization e.t.c. By being compliant, organizations also get to avoid sanctions, steep fines, and the possibility of losing their operational licenses.
I’d like to wrap this section with this connection — “organizations need a well-defined data and analytics strategy to get the right data, and having the right data at your disposal is one of the most fundamental prerequisites for becoming data-driven and succeeding in this new data-driven world.”
Conclusion
More often than not, business data provides the valuable insights you need to understand whether your company is progressing or not, what your competitors are doing more than you, how your customers perceive your brand, and so on. If your organization isn’t genuinely data-driven, the chances are that you’re losing to data-driven organizations that already use data as a strategic resource and an integral part of their business process.
An excellent way to make progress and position yourself to become winners in today’s digital world would be to examine the challenges mentioned in this post, address any limitations your organization might be facing at the moment, and then apply the principles and techniques I suggested in this post. While at that, always remember that becoming a data-driven organization doesn’t just happen overnight — it’s a deliberate and consistent journey that leads to better results over time.
I’d conclude with this quote: “running a business or making business decisions without data is like running on the streets with both eyes blind.” No modern organization wants to operate blindly forever — it’s high time you start mastering and using data to drive your organization forward. I wish you all the best in your journey to becoming data-driven.
