Creating data driven culture. Step 1: "kill" your company

A study done by McKinsey Global Institute shows that data driven organizations are:

23 times more likely to acquire customers

6 times as likely to retain those customers and

19 times as likely to be profitable as a result

These numbers can be both inspiring and chilling depending on the data maturity state of your company. The truth is that most of the companies have more data than they know or more precisely — than they know what to do with. Many are in fact overwhelmed with data and are often confused by what defines being data-driven.

A company is data driven when its data is actively used in a way that reduces uncertainty and drives better decisions. This means that data is a part of the core business strategy i.e. data is actively used to make decisions and achieve company objectives, including its financial goals. This applies to all parts of business — from deciding whether to launch a new product feature to analyzing how to provide the best possible customer experience. Making decisions based on data creates the possibility for a single source of truth and decreases the need for discussion when answering questions. In other words, it enables autonomous decision making.

To enable data informed decision making you primarily need three things: accessibility to data, data tools to handle the data and user knowledge of how to utilize the data and tools. Currently there is an abundance of data tools out there to help you collect, model and analyze your data. However, before you can yield the value data analytics can create, you need an organization that is ready to use data in their daily work.

Undeniably, commitment of your people is crucial to achieve any mission in an organization. Even more so when that mission implies behavioral changes and new work practices. The transition to becoming more data-driven is unique in each organization, but you can start small to go big and here is how…

Find the champions

Find a champion within your organization who believes in the power of making data-driven decisions. Even better, find several. Employees who are already engaged, who see data as a growth driver and inspire others can be a defining factor in becoming more data driven. How do you find champions when no one obvious is in sight? My suggestion is to involve your people in “killing your company”.

“Kill the company” is a brainstorming exercise where you challenge your people to find weaknesses in your business that competition could exploit to make your company go bankrupt. In other words, it is an exercise that prompts people to consider the standard question — “How can we beat the competition?” — and instead ask, “How can the competition beat us?” What if… the data you are selling becomes free tomorrow? What if you are LEGO and plastic becomes forbidden tomorrow? What would be your next step to survival and how would you position yourself?

Run this exercise with your people and LISTEN. Your champion is the person who will focus on how your competition would make you go bankrupt by using data and insights it provides. This is the person who can help you make the transition successful through inspiring others′ interest in data and possibilities that lie within data-driven decision making.

Run experiments

Analytical skills take time to acquire and many people can be intimidated by working with data in the beginning. Meanwhile, most of the people in an organization have assumptions about how one could improve most of the business areas. How often do you hear “I bet that…” or “if only, then…” in a conversation with your colleagues? Way too often such assumptions are forgotten as soon as the conversation is over.

The truth is that these assumptions can become a powerful innovation engine. Some of these assumptions could create significant value if only there was a way to test them and make the findings actionable. Encouraging people to test their assumptions by creating small experiments can be remarkably powerful. It can empower people to use data in their daily work as well as have drammatic effects on employee engagement and creativity.

During the “kill the company” exercise with your organization, several weak spots of your business will be identified. Convert these into assumptions that can be tested on a group of customers. Involve your data champions to build simple experiments and showcase how data can be used to gain insight to the rest of the organization. This way you will empower your champions to pave the way as well as gain valuable learning in the process.

Scale data competence within organization

Another important characteristic data-driven companies have is a thorough understanding of data value in the company. Data science is becoming increasingly important in all industries, but depending solely on highly skilled data scientists to create a data-aware company culture is not feasible. It is essential to democratize some of the data tools in order to be able to scale data skills in an organization. People need to get a better and more aware relationship with data and understand how they could use it to make their life better.

An inspiring example of democratizing and scaling data science within an organization is the one from Airbnb. The company has a highly-skilled data science team that has created an infrastructure consisting of data tools available to everyone in the company. In order to scale company data skills, they have created an internal university with a vision to empower every employee to make data informed decisions. They teach basic statistics and analytic skills as well as more advanced topics and tools (SQL, Core data, R). Through this initiative all employees get a chance to learn data science and get empowered to understand and experiment with data. Airbnb Data University has experienced strong employee engagement in terms of participants and volunteers to further develop the courses and is continually expanding to new locations.

A journey to becoming more data driven can be started with a few people and scaled throughout the organization as data awareness and maturity increases over time. Making your company data your competitive advantage is what will make or break traditional organizations in the future.

Feel free to get in touch with me in case you have questions, reflections you would like to share or need some tips on further reading about the subject.