Why Culture Is the Greatest Barrier to Data Success
In order to compete in the new digital economy, businesses must become increasingly data-driven. Few executives would dispute this objective. Recent events, including the global outbreak of COVID-19, have underscored the critical importance of having reliable data to inform organizational decision-making. Yet companies continue to struggle to operate in a data-driven manner. Why?
Even though we are now decades into the age of competing with data, a 2020 NewVantage Partners survey of C-suite executives representing more than 70 Fortune 1000 companies found that only 37.8% of companies have created a data-driven organization. In the same survey, 45.1% of executives reported that they compete on data and analytics, but a majority — 54.9% — stated that they do not.
Meanwhile, investments in data are increasing, with 98.8% of organizations reporting that they are investing in data initiatives. Nearly a fifth of these companies — 18.3% — have invested more than $500 million. Changes are also happening when it comes to enterprisewide governance. Large corporations have increasingly embraced the newly established role of chief data officer (CDO). While only 12% of companies had appointed a CDO as of 2012, this percentage increased to a high of 67.9% by 2019 before falling back to 57.3% in 2020. Among major companies today, there is nearly universal acceptance that data-driven management is strongly preferable to the alternatives.
In spite of the growing consensus and investment levels, only half of organizations — exactly 50% — reported that they are managing data as a business asset. The advent of big-data solutions and a next generation of data management capabilities — Hadoop, data lakes, DataOps, and modern data architectures — have been helpful but have not assured successful business adoption or outcomes. Technology does not appear to be a barrier or the problem. Only 9.1% of executives pointed to technology as the principal challenge to becoming data-driven.
Albert Einstein is said to have remarked, “The world cannot be changed without changing our thinking.” What is clear is that the greatest barrier to data success today is business culture, not lagging technology. In fact, cultural factors — that is, people and process issues — were cited by 90% of executives as the principal obstacle that they face. It is not enough for companies to embrace modern data architectures, agile methodologies, and integrated business-data teams, or to establish centers of excellence to accelerate data initiatives, when only about 1 in 4 executives reported that their organization has successfully forged a data culture.
Cultural change and business transformation must be adopted at all levels of an organization for data-driven management to be truly embraced. Having professionally engaged with scores of large organizations over the course of the past two decades, each at a varying stage of maturity, I have found that certain actions distinguish successful data-driven companies from those that continue to struggle.
1. Secure executive commitment, not just lip service. Executive commitment is essential to building a culture where data is central. Pay attention to what companies do, not what they say. Most pay lip service to the criticality of data in their annual reports and company mission statements, but far fewer companies embody it in their DNA or in their day-to-day business practices. Some companies, like Capital One and American Express, have a history of embedding data in all aspects of their business culture. For most legacy companies, however, building a data culture remains a challenge. Companies that have overcome it instantiate data processes throughout their supply chains, from data production to data consumption.
