I remember watching MIT professor Andrew McAfee years ago telling stories about the importance of data over gut feeling, whether it was predicting successful wines or making sound business decisions. We have been hearing about big data and data-driven decision making for so long, you would think it has become hardened into our largest organizations by now. As it turns out, new research by NewVantage Partners finds that most large companies are having problems implementing an organization-wide, data-driven strategy.
McAfee was fond of saying that before the data deluge we have today, the way most large organizations made decisions was via the HiPPO — the highest paid person’s opinion. Then he would chide the audience that this was not the proper way to run your business. Data, not gut feelings, even those based on experience, should drive important organizational decisions.
While companies haven’t failed to recognize McAfee’s advice, the NVP report suggests they are having problems implementing data-driven decision making across organizations. There are plenty of technological solutions out there today to help them from startups all the way to the largest enterprise vendors, but the data (see, you always need to go back to the data) suggests that it’s not a technology problem, it’s people problem.
Executives can have farsighted vision that their organizations need to be data-driven. They can acquire all of the latest solutions to bring data to the forefront, but unless they combine that with a broad cultural shift and a deep understanding of how to use that data inside business processes, they will continue to struggle.
The study’s authors, Randy Bean and Thomas H. Davenport, wrote about the people problem in their study’s executive summary. “We hear little about initiatives devoted to changing human attitudes and behaviors around data. Unless the focus shifts to these types of activities, we are likely to see the same problem areas in the future that we’ve observed year after year in this survey.”
The survey found that 72 percent of respondents have failed in this regard, reporting they haven’t been able to create a data-driven culture, whatever that means to individual respondents. Meanwhile, 69 percent reported they had failed to create a data-driven organization, although it would seem that these two metrics would be closely aligned.
Perhaps most discouraging of all is that the data is trending the wrong way. Over the last several years, the report’s authors say that those organizations calling themselves data-driven has actually dropped each year from 37.1% in 2017 to 32.4% in 2018 to 31.0% in the latest survey.
This matters on so many levels, but consider that as companies shift to artificial intelligence and machine learning, these technologies rely on abundant amounts of data to work effectively. What’s more, every organization regardless of its size, is generating vast amounts of data, simply as part of being a digital business in the 21st century. They need to find a way to control this data to make better decisions and understand their customers better. It’s essential.
There is so much talk about innovation and disruption, and understanding and affecting company culture, but so much of all this is linked. You need to be more agile. You need to be more digital. You need to be transformational. You need to be all of these things — and data is at the center of all of it.
Data has been called the new oil often enough to be cliche, but these results reveal that the lesson is failing to get through. Companies need to be data-driven now, this instant. This isn’t something to be working towards at this point. This is something you need to be doing, unless your ultimate goal is to become irrelevant.
By Ron Miller