10 Steps to Creating a Data-Driven Culture
For many companies, a strong, data-driven culture remains elusive, and data are rarely the universal basis for decision making. Why is it so hard? Our work in a range of industries indicates that the biggest obstacles to creating data-based businesses aren’t technical; they’re cultural. We’ve distilled 10 data commandments to help create and sustain a culture with data at its core: Data-driven culture starts at the (very) top; choose metrics with care – and cunning; don’t pigeonhole your data scientists within silos; fix basic data access issues quickly; quantify uncertainty; make proofs of concept simple and robust; offer specialized training where needed; use analytics to help employees as well as customers; be willing to trade flexibility in programming languages for consistency in the short-term; and get in the habit of explaining analytical choices.
Exploding quantities of data have the potential to fuel a new era of fact-based innovation in corporations, backing up new ideas with solid evidence. Buoyed by hopes of better satisfying customers, streamlining operations, and clarifying strategy, firms have for the past decade amassed data, invested in technologies, and paid handsomely for analytical talent. Yet for many companies a strong, data-driven culture remains elusive, and data are rarely the universal basis for decision making.
Why is it so hard?
Our work in a range of industries indicates that the biggest obstacles to creating data-based businesses aren’t technical; they’re cultural. It is simple enough to describe how to inject data into a decision-making process. It is far harder to make this normal, even automatic, for employees — a shift in mindset that presents a daunting challenge. So we’ve distilled 10 data commandments to help create and sustain a culture with data at its core.
1. Data-driven culture starts at the (very) top. Companies with strong data-driven cultures tend have top managers who set an expectation that decisions must be anchored in data — that this is normal, not novel or exceptional. They lead through example. At one retail bank, C-suite leaders together sift through the evidence from controlled market trials to decide on product launches. At a leading tech firm, senior executives spend 30 minutes at the start of meetings reading detailed summaries of proposals and their supporting facts, so that they can take evidence-based actions. These practices propagate downwards, as employees who want to be taken seriously have to communicate with senior leaders on their terms and in their language. The example set by a few at the top can catalyze substantial shifts in company-wide norms.
2. Choose metrics with care — and cunning. Leaders can exert a powerful effect on behavior by artfully choosing what to measure and what metrics they expect employees to use. Suppose a company can profit by anticipating competitors’ price moves. Well, there’s a metric for that: predictive accuracy through time. So a team should continuously make explicit predictions about the magnitude and direction of such moves. It should also track the quality of those predictions – they will steadily improve!
For example, a leading telco operator wanted to ensure that its network provided key customers with the best possible user experience. But it had only gathered aggregated statistics on network performance, so it knew little about who was receiving what and the service quality they experienced. By creating detailed metrics on customers’ experiences, the operator could make a quantitative analysis of the consumer impact of network upgrades. To do this, the company just needed to have a much tighter grip on the provenance and consumption of its data than is typically the case — and that’s precisely the point.
3. Don’t pigeonhole your data scientists. Data scientists are often sequestered within a company, with the result that they and business leaders know too little about each another.
