Our most successful business leaders have often had one thing in common: an innate instinct for the direction of their organisations that has repeatedly enabled them to make the right calls.
But we are fast approaching a time when the idea that business decisions are based on instinct rather than data will seem quaint and anachronistic.
Already, many successful modern companies are run on data. Google and Amazon are obvious examples, but data is driving business decisions at companies beyond the technology sector too.
Procter & Gamble, for example, is in the middle of a company-wide push to digitise every possible aspect of its business.
To compete, their rivals will need to catch up quickly.
Data has become a strategic asset and a company’s success will in future depend on how well and how often its employees, at every level of the business, use that asset.
Maturing technologies are driving this trend. A decade ago, data was expensive.
While companies might have recognised the attractions of data-based decision making on everything from operational savings to market opportunities and from financial modelling to supply chain risk, the cost of working this way was prohibitive.
That is no longer the case. CIOs can now commission systems that will capture and analyse vast amounts of internal and external company data.
And this data can be shared across the organisation, enabling informed decision-making at every level of the company.
New culture needed
Still, making the most of these opportunities requires companies to do more than simply invest in better data technology.
What’s really needed is a cultural shift: for companies to ensure all their employees across the business are sufficiently data literate to both recognise the information they need in order to make better decisions and to know where to find it.
Fostering such a culture is easier in newer organisations not held back by legacy IT systems, which is why the likes of Amazon are often trailblazers.
But long-established businesses are beginning to make the transition too.
Proctor & Gamble’s digitisation process is one example, while oil and gas businesses are making great use of huge amounts of exploration data.
The pay-off is worthwhile.
A recent study of 179 companies, led by an economist at the MIT Sloan School of Management, concluded that organisations that have moved to data-driven decision making have productivity levels 5 or 6 per cent higher than could be explained by any other factor.
Making the change
It will take time to make companies more data-centric. But the shift will not be possible at all unless the executive team acts in concert.
While technology buying choices may be the responsibility of the CIO, cultural change must be driven by a wider range of business leaders, including the chief executive.
Beyond culture alone, CIOs need to look at the following points:
- Reskill the organisation.
The CIO may deliver technology with which the business can capture and analyse data, but the whole company needs to be able to use it effectively.
That may require organisational change: embedding data specialists in all business units, for example, rather than amassing them in IT.
- Appoint a data champion.
Companies such as Bank of America have chosen to appoint a chief data officer, with responsibility for data management strategy, policy and governance.
A champion at this level of the business can be the prime mover in assessing the company’s existing data inventory and gaps that need filling.
They can determine the extent to which data is already being valued and the skills with which the company needs to equip its staff.
- Rethink relationships.
Companies must value the data they hold. This will have consequences for internal issues such as storage and data deletion, but will also lead companies to reassess the information they share with partners.
If data has a measurable value, is the company compensated sufficiently for passing it around?
The transition to data-driven decision making requires a change of mindset. But those that fail to make the shift will be left behind by companies with a commitment to extracting ever more value from data volumes that are increasing exponentially.
Instinct is no longer good enough.
To read more about fostering a data centric culture read The Business Implications Series: Data Culture Paper.
Gavin Michael is Chief Technology Innovation Officer at Accenture. Follow Gavin on Twitter @gavinmichael