How CEOs Can Lead a Data-Driven Culture
While businesses across the world are trying to make more effective use of data, analytics, and AI, a key impediment is holding many of them back: The lack of a culture that truly values data/analytics capability and the superior decision making that can flow from it. Yet as we’ll describe, it’s possible to create a data-driven culture and accrue the competitive benefits that result.
In companies with strong data cultures, important decisions are informed by data and analytics and executives act on analytically derived insights rather than intuition or experience. While digital-native companies like Amazon and Alibaba have strong digital cultures, many traditional companies are struggling to make progress. That’s mostly because few undertake initiatives directly aimed at achieving the desired culture change.
Thus, it shouldn’t be surprising that a 2019 Deloitte survey of U.S. executives found that most – 63% – do not believe their companies are analytics-driven and 67% say they are not comfortable accessing or using data from their tools and resources. Data from surveys taken over time suggest that the problem may be getting worse. A NewVantage Partners survey of large U.S. firms, for example, found that only 31% of companies say they are data-driven, a figure that has declined from 37% in 2017. In 2019, more than three quarters reported that business adoption of big data and AI initiatives remains a major challenge. But 95% of them said that cultural, organizational, and process challenges presented the biggest roadblocks to adoption. Only 5% cited technology as the problem.
Clearly, culture depends in large part on the orientation of senior leaders, and especially the CEO. There is little doubt that a CEO’s own reliance on data – or lack thereof – in decision making and improving the business sends a powerful message to the rest of the organization.
But a CEO’s initial resistance or lack of awareness does not mean that an organization can’t make progress. Just as CEOs are often counselled on their communications and leadership skills, they can also be moved in the data domain through coaching, either by an internal champion, such as the chief data officer, or by outside experts. Linking data and analytics to issues the CEO already holds dear, such as customer focus or employee empowerment, can prove persuasive, as can pointing to outside factors that depend on having a data-based decision making such as regulatory requirements (for example in hospital readmissions) or the threat of more data-driven competitors.
While the CEO should become a visible champion of the new culture, he or she needs an operational partner. A logical candidate is the chief data officer, a role that is growing in prevalence, visibility and scope. The CDO is well positioned to become the data and insight change agent, leading the initiatives we describe below.
In addition to trying to convert a passive or reluctant CEO, three types of change programs can move an organization in the right direction.
Carefully planned educational programs should be pushed into every level of the organization. Experiential programs such as design thinking exercises, group problem-solving, and hands-on hackathons tend to be more effective than talking heads. Position-appropriate exercises for staff at different levels can illustrate the benefits of analytics and data-based decisions; for example, executives can focus on framing the problem, and front-line employees can interpret the implications of analytics for customer relationships. To see an example of one such initiative, look at this simulation program developed by one of us (Davenport) to teach analytical decision-making in a consumer products company.
Education should focus not only on attitudes and knowledge about data, analytics, and AI, but also on skills for finding and manipulating data at every level, including senior management levels.
