In 2017, the Economist published a report titled “The world’s most valuable resource is no longer oil, but data.” Following this, many industry experts and publications hailed “data” and “data-driven decision making” as the next big thing in business. As more and more companies and institutions began to realize the power of using data, there emerged the phenomenon of a “data-driven organization.”

To put it simply, a data-driven organization is a company that not only recognizes the power of collecting raw data, but also one that understands that decision making cannot be performed using raw data alone. Rather, being truly data-driven involves digging deeper into the data gathered, refining it, and finding ways to use the information mined from the data to drive growth and profitability. It means working with the right kind of data whenever it is needed and it could happen in multiple ways – observing customer behavior, analyzing demographic data, gathering survey responses and more. 

In today’s ever-changing landscape of evolving competitors and well-funded disruptors, data is undoubtedly becoming the key driving force for organizations, new and old, to stay competitive and innovate ahead.

This is evident with the ever-increasing growth in revenue of the big data and analytics software market which showed a  10.4% jump to US$67 billion in 2019 as compared to US$60 billion in 2018.

With the IPO of Snowflake (a cloud-based data warehousing company) at an incredible valuation of US$70 billion, this underscores the increasing role that data plays in effectively running the operations of corporations and organizations and is now effectively mainstream thinking.

But why the emphasis on data and why are companies organizing themselves around it?

According to PWC, data-driven organizations are 3x more likely to experience significant improvement in their decision making – that means better performance, company growth and a fatter bottom-line.

McKinsey also highlights that data-driven companies are 2.6 times more likely to have a higher ROI and are 23 times more likely to outperform non-data-driven firms in acquiring new customers.

However, being a data-driven organization goes beyond just committing to a large data infrastructure investment or hiring a dedicated team of data analysts and scientists.

Companies utilizing data in silos and cherry-picked tasks will experience only minimal success, data will have to be integrated into the decision making fabric of their organization.

Challenges to Becoming Data-Driven

Although investment in data and analytics initiatives have never been stronger, companies are still struggling to become truly data-driven organizations. According to the NewVantage survey, only 24% have created a data-driven business. It is revealed that a significant challenge to this end is due to cultural barriers such as people, processes, and culture rather than technological barriers. Having the right analytics tools in place would not lead to desired results until those working with it are familiarized and any cultural resistance is overcome.

Furthermore, another challenge is that despite the availability of both vast amounts of data as well as analytics tools, organizations are either not able to successfully formulate a data strategy or lack the necessary skill sets to make full and effective use of the resources available to them.

As mentioned earlier, advocating for data proficiency throughout the organization – whether through data literacy programmes and training or other avenues – could prove to be an important leap towards overcoming these challenges.

A Data-Driven Organization Is the Goal – Getting There Requires Building a Data-driven Culture

It can be said that the quote “Culture eats strategy for breakfast” – most often cited to management consulting guru Peter Drucker – applies not just to work culture, but also to a data culture. While acquiring technology such as business intelligence tools, and assembling a team of data experts is within the reach of most organizations, shifting mindsets and establishing a culture is much harder. 

Of course, like work culture, a data-driven culture also has to be initiated and encouraged by top management and it must filter through all levels of the organization. Placing data at the front and center of the work done – right from the recruitment process to communicating results, making the appropriate analytics tools available to employees, and adopting a data strategy are all ways to ensure that an effective data culture is in place.

As Gartner succinctly puts it: “Data can only take an organization so far. The real drivers are the people.”

A data-driven organization is one that effectively and consistently utilizes data in their decision-making process across all levels of the organization. 

It means driving change, innovating new products, delighting customers and enhancing employee productivity through the power of data.

In this article, we will be highlighting the traits of a data-driven organization and why it matters for organizations.

4 Key Traits of a Data-Driven Organization

While many companies can claim to utilize data for their decision-making, true data-driven organizations exhibit key traits which can be used as a guide to measuring how close (or far away) your organization is from the end goal.

Let’s dive in and discover how a data-driven organization functions and their relationship with data that goes beyond just fueling the bottom-line.

1. They have achieved data-democratization across the entire organization

A data-driven culture can only be fostered when anyone and everyone across the organization can gain access to the data they desire in a way that is intuitive and hassle-free, without the need to consult data analysts in their IT department – further causing delays in the decision making process

Data-driven organizations have achieved this data-democratization by utilizing business intelligence solutions powered by conversational analytics and streamlining their data into a single source of truth to ensure everyone is speaking the same ‘language’. For example, Amazon offers predefined APIs like SageMaker that enables individuals at various levels of competence to dabble in analytics and machine learning.

Through the usage of conversational BI platforms, anyone throughout the organization can simply ask conversational questions without the need to understand the datasets at all.

2. Business leaders on the top value data & rely on them to make decisions

Lasting change is best initiated by the leaders of a company, but not by simply paying lip-service to matter.

Business leaders will have to believe in and prize data as an asset that adds value to their decision-making process.

Data-driven organizations will have the buy-in of key management figures and middle-managers to lead the way in establishing a data-driven culture. When Satya Nadella, the current CEO of Microsoft stepped into his role in 2014, one of the first things he did was write about establishing a data culture for everyone. This encouragement and advocacy from him as someone at the top  was exactly what enabled Microsoft to re-emerge as a major force in the current landscape.

Business leaders will regularly utilize data in their decision-making process and explain to employees how decisions are made in an analytical way with data at the heart of the conversation.

One way this is done is by utilizing a BI solution powered by conversational analytics, by asking questions directly to the data (no matter how disparate the data points are) to gain insights within seconds.

3. The organization has achieved data literacy

While most companies do utilize data, it only plays a supportive role when it comes to business initiatives. One of the key reasons for this the lack of data literacy throughout the organization.

According to Gartner “By 2020, 80% of organizations will initiate deliberate competency development in the field of data literacy, acknowledging their extreme deficiency.”

A company with data literate employees will be able to effectively understand data, converse with it and most importantly utilize it for decision-making. A prime example of a company that pushes for data literacy is Google which mastered the learning culture by launching the “g2g” (Googler-to-Googler) programme. A lot of the popular courses are centered around improving data literacy for example, by offering coding classes and app development bootcamps. 

4. Teams freely collaborate together & drive data-led meetings

A data-driven organization is one that uses data to unite teams across departments and drive collaboration meetings.

From utilizing business intelligence tools in their enterprise collaboration platforms to water-cooler conversations centered around data, collaborations will be more frequent and fruitful.

By embracing the power of data and becoming ‘one’ with it, companies are able to make more confident decisions and realize the practical benefits of doing so.

Why It Matters to Become a Data-Driven Organization

Data-driven organizations are organizations that are well-equipped, resilient, and brimming with innovation, rising to the challenges of an ever-changing business landscape and delight customers that demand only the best.

1. Better capitalize on opportunities and consumer trends with speed

Breaking into new markets, creating new products and innovating new offerings often entail a significant element of risk. 

However, data-driven organizations can effectively mitigate such risks and come to decisions that are logically sound with an optimized chance of success – and most importantly, backed up by data.

Image Credit: Marca Politica

Netflix utilized the enormous amounts of data for their predictive analytics to assure success for their $100 million investment into the ‘House of Cards’ political thriller original series that starred Kevin Spacey.

Through the power of data-driven decision-making, Netflix was able to take swings at the fences while minimizing their downsize when it comes to launching new titles for the audience. This data-driven approach was utilized again for the movie ‘Bird Box’ which saw it gather views by over 45 million accounts. Despite having a casting that broke from tradition, the film was again a major success thanks to data.

Amazon

2. Drive greater revenue to fuel the bottom line

By embracing data, companies will be able to also unlock opportunities and develop solutions that will help drive greater profitability from existing sources of revenue.

Amazon, for example, utilizes its wealth of consumer data, from customer preferences to browsing history and recent purchases, to fuel their product recommendation engine.

This allows them to seamlessly recommend products with their ‘Frequently Bought Together’ features during checkout. This alone helped to generate around 35% of the company’s revenue.

Southwest Airlines

3. Create more customer-centric solutions and experiences

Customers drive revenue and through the power of data-driven decision making, companies will be able to develop solutions that specifically cater to their customers’ needs and desires without any guesswork.

An example is Southwest Airlines who cleverly utilised the power of data to determine the best customer services to implement

By observing and analyzing their customer’s online behaviors and actions, they were able to tailor the best types of services to provide on specific flight routes as well as provide the best rates.

This helped to consistently grow their customer and loyalty segments thanks to their data-driven decision-making efforts.

Walmart Logo

4. Build more efficient and productive teams

For a data-driven organization, the use of data isn’t just restricted to enhancing customer experiences or launching new products. 

Through the use of HR data, people analytics allows companies to build more effective teams and better manage talent, especially in a world where remote-working is fast becoming the norm thanks to the COVID-19 pandemic.

Walmart, like many supermarket retailers, faces the issues of high employee turnover and attrition.

Using data and analytics, Walmart was able to determine that losing an associate in less than 90 days was a net loss for the company, and for every 1% of turnover reduced, millions of dollars would be saved.

This realization, through the power of data, spurred the company to take measures such as better talent development and spending US$1 billion to increase the pay of their employees. This will help build stronger internal teams that will translate into better customer service and a more productive workforce.

Building a Data-Driven Organization Starts with Establishing a Culture Around Data

While the benefits of a data-driven organization are enticing, business leaders will need to take strategic steps to transform their processes and shift mindsets to become one.

They will have to build a culture where data is prized and utilized as a part of their company DNA.

Thankfully, we have an actionable 7-step guide that leaders can use to start the journey towards fostering a data-driven culture.

Looking for a business intelligence solution to promote data democratization throughout your organization?

Check out QBO, our business intelligence platform that is powered by conversational analytics. 

That means anyone and everyone in your organization will be able to access the data that they need to gain actionable insights by simply asking questions to the data like they would in a normal conversation.

Embark on a free 14-day trial today and start building the culture of data-driven decision making for your organization.