Despite all the hoopla around artificial intelligence and advanced analytics in recent years, there has been a decline in corporate efforts to become more data driven. What happened, and how can things be put back on track?
Efforts to move forward with data-driven values have been hampered by complexity, and recalcitrant corporate cultures, an analysis published by Harvard Business Review Analytic Services and underwritten by Capital One shows. The report’s authors point to revealing data from a survey conducted in early 2023: 60% of enterprises are employing data to drive innovation, down from 64% in 2020. Forty percent report competing on analytics, down from 50% in 2020. (The data was drawn from a NewVantage Partners/Wavestone survey.)
What became of all the enthusiasm for data-driven business we keep hearing about?
“The struggle to become more data-driven may be due in part to the complexity of building a data culture,” the study’s authors state. “Companies have not progressed in many of their efforts to become data-driven over the past three years.” Efforts to instill data-driven practices are weak — cited by less than 25% of technology executives over the past three years.
Developing a data strategy that fuels real business value — delivering increased revenue or greater innovation across products, services, and experiences — is a challenge easier said than done, the report continues.
This has implications for moving forward with next-generation business initiatives such as artificial intelligence. “Making the most of AI requires a multifaceted data strategy that enables people across the company to use data to inform important decisions,” the report states. “Fostering a data-driven culture throughout the organization is an integral piece of a successful data strategy.”
In addition, the co-authors point out, “companies may be unsure how to proceed in their efforts. There is no standard playbook, no blueprint yet, that chief data officers can use. Any change or transformation takes time. However, many organizations have a completely unrealistic view of what it means to be data-driven and develop a data culture.”
What does a healthy data strategy look like? The report points to the following must-haves:
- A dedicated executive leadership role: There’s a pivotal role for chief data officers, who can put data-driven analysis front and center in business operations and strategy. “Organizations must translate the strategy for each business unit by having the CDO work closely with the business unit leaders, so they take steps to ensure that people throughout the organization understand the value of data and can leverage it.”
- A forward-looking organizational culture: “Companies that generate the most value from their data are taking a methodical approach grounded in business needs, while appreciating that they must be flexible when applying data in a fast-changing business environment.”
- Built-in data governance: This needs to incorporate central data standards and systems. “With a foundational central ecosystem, organizations can enable federated data access to users across the company so they can harness the power of data in their domain.”
- A healthy data ecosystem: To promote “the scalability, pliability, and governance of democratized data, and allow the organization to take advantage of AI and other emerging technologies. “
- A long-term data strategy: “Data strategies sometimes fail because organizations publish a big document about what they want to do without having a plan on how to execute the strategy,” the report states. “A data strategy should be focused on the next two to three years, with “data strategy spending that is based on their needs over the next three to 12 months.”
The companies that will see the most successful data strategies “will be the ones that think the most creatively,” the report states. They “don’t put arbitrary obstacles in their own path, and that realize the way they did things in the past may not be how they should do them in the future.”
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