How data culture is changing the enterprise - Pyramid Analytics

The competitive advantages of data-driven organizations are clear. The rise of the Chief Data Officer as an accepted executive position demonstrates that the business world has embraced the concept of the data-driven organization.

Why, then, do we still encounter resistance and skepticism when implementing best practices of data-driven organizations? And what is the best way to address this challenge?

What being a data-driven organization means

A data-driven organization is one that has begun a cultural journey to define data as its main decision platform, shifting towards using data to carefully design metrics that drive its decision-making process.

Traditionally, enterprises have relied on executive observation, insight, and intuition for critical decisions, which often leads to negative consequences. This approach is no longer acceptable. The data-driven organization emerges from a cultural attempt to reduce reliance on intuition and observational decision-making. In such organizations, there is no need for a trial-and-error philosophy.

Why be data-driven?

A real-world example is Jeff Bezos, who is known for using data to drive Amazon. Amazon was built on a data-focused perspective and an understanding of the story that data conveys. Bezos used data—such as the growth in web usage—as the foundation for building his company, rather than relying on trial and error.

Consider a hypothetical example: a company collects data to make smarter, more informed decisions. Data points might include the territory where the product is selling, the sales representative, the length of the sales cycle, price, discounts, and more. How the company responds to and interprets this data becomes a differentiator.

There may be dozens of data points collected about the sales pipeline, but not all contribute to an accurate, comprehensive story. The best practice is to focus on the most relevant data points and derive conclusions from them.

To understand why certain data points are relevant and how they can inform business decisions, companies must approach the problem with minimal prior assumptions and judgments. They need to be open to hearing the story the data is telling, rather than trying to fit data into a preconceived narrative.

Developing a data-driven culture

To leverage data for smarter, more informed decisions, organizations need a cultural realignment that places data at the center of decision-making and elevates its value above individual insight and observation.

One key benefit of this perspective is increased transparency. By relying on data to guide decisions, organizations ensure transparency in their actions. There is a logical foundation for explaining why certain courses of action are chosen.

This transparency applies to both organizations as a whole and to individual processes. Measuring the efficacy of actions allows organizations to reduce trial and error. Successes and failures become apparent more quickly, enabling timely adjustments.

Careful data analysis can prevent misallocation of resources and better align products with consumer needs and desires.

Obstacles to becoming data-driven

There are obstacles to achieving a data-driven culture. It is not enough to prescribe process improvements; companies must fundamentally change how they prioritize data, or they risk reverting to reliance on executive insight and direction.

Becoming data-driven requires devotion and discipline. It is an incremental process that can be frustrating when data analysis does not yield actionable intelligence immediately. Frustration can lead to resistance to change, so it is important to manage expectations and maintain enthusiasm for adapting to a data-driven environment.

Resistance to this cultural shift mirrors the general lag between technological innovation and its adoption. Developing a culture of data reliance is a response aimed at decreasing this lag and speeding up adoption rates. Consider how long it took for the business world to adopt cellular phones, smartphones, email, and web presence—tools that are now indispensable.

Why developing a data-driven culture is necessary

Companies that consciously adjust their culture to focus on data are poised to gain a competitive advantage as early adopters of business intelligence technologies.

Marketing is a prominent example of an industry that has shifted to being data-driven. Previously, marketers relied on intuition and sparse data from focus groups. Now, even junior marketers are expected to have solid data to support their work. Large marketing firms use hard numbers to justify their expenses. From the top down, marketing has adopted a culture of data reliance.

This is the future of all industries, and the faster organizations embrace it, the better.

The next post on Data Shark will highlight best practices and pitfalls to avoid as organizations navigate this cultural shift.