Here’s the question: Are you a Data-driven Company or a Data Hoarding company?
Today, we are inundated with data – both in personal lives and our professional lives. Companies the world over have data from internal systems, external data providers, sensor and IoT data, and social media. It seems like most firms are good at collecting and hoarding data, rather than leverage the data for improving operations or making data-driven decisions.
There are many use cases of how big companies can use big data and analytics.
The data hoarding mentality can cause the classic dilemma of separating the wheat from the chaff (or signal from the noise) and also the diminishing returns from extra data. In addition to the data overload problem, many company leaders also do not tend to take advantage of the tools and data in their decision making, and instead, rely on gut feel and instinct.
Let us take a few examples:
Campus Hires: Let us assume Behemoth, Inc hires extensively from the local university campus. It is a commendable endeavor and also a good strategy since the approach relies on locally grown talent, keeps the talent pool within the locality, and lowers the cost of talent acquisition.
But let us assume the attrition rate for all those campus hires is 50% more than for other recruitment sources. This information is available in the HRIS systems as every employees’ demographic and educational data, as well as the hiring dates and separation dates, are available at the fingertips. A more in-depth analysis may demonstrate that the local college graduates are using the company as an interim step and moving on to greener pastures a year or two after getting a bit of experience and a firm economic footing. It could be because the campus hires do not have roots in the community, or the local community is unable to provide cultural, social, and entertainment options that the young out of college millennials desire.
If the company were making data-driven decisions, it would be apparent that the unduly high attrition rates are posing a burden, and hence a change in strategy is warranted.
But despite the data sitting in the HRIS system and available to all, the company continues its merry way of local campus hires. Then the attrition rate is considered to be a separate problem. Instead, if the executive of Behemoth, Inc acknowledged the data, options may include hiring graduates who are from the local communities and offering transfer options to other desirable locations, within the company’s ecosystem, across the country or a combination thereof.
The Usage Conundrum: MegaStartup is a hot software unicorn (a company that has over a billion-dollar private market valuation). Thanks to the high profile, media buzz, deep pockets (thanks to the VC investments), and the well-connected board members, MegaStartup has landed several large deals, each of which was heralded as a big win.
But lo and behold, two years after the implementation of the MegaStartup software in large companies, the usage rates are abysmal, and there is a high risk that many of the deals may not be renewed. The MegaStartup executives were beside themselves, blaming the entrenched bureaucracies of large companies and the “dumb” workforce that cannot use even the easy to use software with a fantastic interface.
But the truth lay bare in the data. One or two success stories indicate that significant professional services effort was the precursor to driving sustained usage. If the MegaStartup executives looked inward and into the data, rather than point fingers everywhere, it would have been abundantly clear that the go-to-market strategy is to blame. A data-driven culture would lead to changing the business model and GTM to a managed services model. Instead, despite hundreds of millions of dollars capital investment and high profile deals, the MegaStartup may end up on the infamous list of “unicorpses.” (Unicorpses are the former unicorns that failed and were either shut down or acquired for pennies on the dollar.)
Are you a Data-driven Company or a Data Hoarding company?
- If you don’t have a strategy on how to use data and what outcomes to drive, you are a data hoarding company.
- If you have no ability to cluster, classify, and correlate data to identify patterns and make predictions, you are a data boarding company.
- If your firm does not even know what data it is collecting and from where you are most certainly a data hoarding company.
Why do companies Hoard rather than Rely on Data for Decision Making?
Primarily, it is FOMO (Fear of Missing Out), and assuming they will need something in some distant future, companies collect data. Without a clear objective and analytical strategy, compiling unnecessary information causes several challenges.
- It is easy to get lost in all the hay and miss the needle.
- The more information one has, the more unmanageable it is.
- Compiling confidential information without reason could pose significant cybersecurity risk.
- Customers may feel uncomfortable sharing the information which the company may never use.
How do companies use the data available to drive decisions?
Companies that are the leading edge of using data for decision-making follow some of the best practices below:
- Best-in-class firms first define a precise data and analytics strategy outlining the outcomes they are striving for and then work backward to identify what data is necessary.
- The companies then collect the minimum required information with appropriate consents.
- These firms also place a substantial focus on safeguarding the data.
- And they use the data and surface the results to executives and decision-makers with scorecards, dashboards, and alerts/notifications.
So, don’t be a data hoarding company. In today’s world, where privacy and security concerns abound, and stringent legislation like GDPR and CCPA govern the collection and use of data, please ensure you are following in the footsteps of leaders who collect what they use and collect what they need.
And, when someone asks you the same question, “Are you a Data-driven Company or a Data Hoarding company,” you are ready with the right answer.