The Role Of Data-Driven Culture In Digital Transformation Success

Leaders must recognize the inseparable connection between data-driven culture and digital  transformation success.

 

Right now, it won’t come as a surprise that digital transformation initiatives—reinventing business for the digital age—are a top priority for leaders in every industry. They’ve recognized for some time that this work is essential for increasing revenue, reducing operating costs, remaining competitive, and meeting the changing behaviors and expectations of buyers. The COVID-19 pandemic accelerated efforts and today according to Gartner, 87 percent of business leaders consider digital transformation high on the agenda.

However, despite the right intentions, the failure rate for digital transformation efforts is averaging around 70 percent. This is a serious disconnect between intentions and outcomes. While the reasons vary and include lack of expertise and poor internal engagement, one central foundation is often missing from many efforts: a positive data-driven culture.

With the central role that data plays as both an essential input and output of digital initiatives, it’s intuitive that data management is going to be a component of any effort. Data and digital are inseparable partners.

Unfortunately, data issues are often cited as problems in these digital projects. Compounding this challenge is the fact that the fundamental data skills that most organizations possess today are not the same as the superior and advanced qualitative and quantitative aspects of a data-driven culture.

Recognizing the vast chasm between simply managing data and using data as a strategic asset to drive organizational success is one of the most important first steps towards better digital transformation outcomes.

Success in most organizations relies heavily on the right enabling culture. Marvin Bower, the leader who built McKinsey into the global consulting firm it is today, defined culture as “the way we do things around here.” In addition to clear benefits such as achieving business goals and productivity boosts, a carefully fostered culture can result in a better bottom line. For example, great cultures can attract star performers that can help to produce a 33 percent increase in revenue.

Peter Drucker, often credited as the founder of modern management said it best, “culture eats strategy for breakfast.”

Within this broader organizational culture context, a data-driven culture can become a foundation for success in digital initiatives.

But what is a data-driven culture and how can it be fostered?

Simply stated, a data-driven culture is the manner in which a business demonstrates the importance it places on the value of data in all aspects of its operations. Data becomes a central instrument of organizational success. Rather than just a consequence of running the business, data is considered core to how things get done, including in critical areas such as decision-making, innovation, risk management, and growth.

A data-driven culture is not the result of a project or a program; it’s choosing a way to run a business.

Prioritizing a data-driven culture acts as a forcing function to help ensure that data is high quality and can be trusted, accessible to the right people, and can be found and understood such that it’s actionable. Importantly too, there’s a learning culture such that leaders and staff know how to interpret the data, analyze it, and glean its insights.

Creating this type of culture is deliberate and seldom arises organically. Deep and authentic executive commitment is required in addition to fostering the winning conditions. In every successful data-driven culture, leadership is a defining characteristic. Leaders should model positive behaviors that they expect to see from their teams and clearly articulate the metrics for success. Active and on-going engagement will be necessary as will monetary investment.

Managers must communicate success stories as the data-driven culture journey unfolds. This will gradually reduce skepticism by demonstrating the value of the work. An occasional celebration when a milestone is achieved along the way actually goes a long way.

As the effort gets underway, organizations must know what their data strengths are and assess their gaps. This work has to be comprehensive and cover people, processes, technology, and of course, data. Data-driven cultures require extensive attention to all four areas. What will likely emerge quickly is the need for training and tools. Both require focused attention and investment.

Success with fostering a data-driven culture requires organization-wide data literacy skills. A business may have access to massive volumes of valuable data, but if leaders and staff don’t know how to analyze, interpret, integrate, and communicate it, that’s going to create significant barriers to progress.

To be clear, there’s a direct line that runs through data-driven culture, skills, and achieving digital transformation objectives.

When done right, fostering a data-driven culture will produce better outcomes for the organization. In addition, it can enrich employee capabilities, and create a source of fuel that powers more innovation. More specifically, it appears to be essential in creating the conditions for success in the digital transformation initiatives that lie ahead for every organization.