In the immediate aftermath of the 9/11 attacks, the American military quickly realized that transformation of mindset and culture would be necessary to sustain the fight and defeat a dangerous, dynamic and vastly decentralized enemy. We had the best warriors, intelligence specialists and civilian support at our disposal, yet weren’t nimble enough to move at the speed these wars required. And even though we had a vast proliferation of data and intelligence, much of it was redundant, conflicting or trapped in silos.
This is not so different than what we face in today’s global business environment. We have access to the most comprehensive data-collection tools and diagnostic information in the history of business. But if we don’t adapt our tactics so that data is actually useful for the “war” as it is being fought today, those advantages aren’t advantages at all.
The opportunity?
Leveraging big data to gain the necessary intelligence for transformation decision making.
The challenge?
In order to properly utilize big data for transformation decision making, an organization must first become data-driven – which also requires a shift in mindset and culture.
At every level in the Navy SEAL Teams, we train for and embrace a decentralized approach to leadership, collaboration, and communication. We’re ready for the unconventional fight. But when you pile on everything else that comes with modern warfare—the intelligence assets that filter in from around the globe, the political ramifications of the missions we undertake, the actions other organizations are undertaking at the same time to solve the same problems—it’s easy to see how chaos can reign. Without a holistic approach to data analysis and integration, the intelligence that can be applied to the overarching strategy becomes too complex and difficult to decipher.
The traditional hierarchical structures, cross-branch subcultures and information sharing methods often made us have to fight against ourselves before we could fight the enemy. Senior leaders finally realized that the military in general and various task forces at the tip of the spear had to transform into modern twenty-first century organizations that were aligned behind a single narrative. To do that, we had to be better positioned to gather and share information and share that information seamlessly. Rigid structures not only inhibit the ability to collect data, but also to communicate an aligned vision. What the special operations communities understood in those first years after 9/11 applies directly to today’s business world—from start-ups to regional organizations to global corporations.
In a 2015 report by KPMG titled Data-driven Business Transformation: Driving Performance, Strategy and Decision Making, they point to the fact that the phenomenon of big data has changed the business world like never before. Organizations now have the opportunity to use data and analytics to become less process-centric and more data-centric – and therefore data-driven when it comes to strategy and decision making.
Data-driven organizations are seeing upwards of 20% to 30% improvements in EBITDA due to unlocked efficiencies and more granular financial insight. But many organizations have yet to put the proper systems and subject matter experts in place to reach their full business intelligence potential. And even though big data has crept to the top of the corporate agenda (similar to culture), most companies need to vastly improve in several key areas:
- The ability to combined, organize and manage multiple internal and external data sources.
- The skill-set required for building analytics models and dashboards for predicting and optimizing the outcomes that transformation will achieve.
- The discipline senior leaders must have to transform the culture to be more data-driven.
Data matters. Intelligence matters. Alignment matters.
And so does establishing the competence and freedom to use data in order to adapt and respond to challenges in real-time. SEAL Teams have to do it to stay alive and defeat the enemy.
So do you, and so does your organization.
In KPMG’s biannual global CFO survey (which they reference in this report), respondents saw big data and analytics as critical for implementing “lean finance” strategies (optimizing finance processes for minimizing inefficiencies, reduce unnecessary costs and improve speed, flexibility and quality). This is the core reason that we replaced the CFO and our entire finance team during one of my company’s transformations. We needed to gather and organize business intelligence and the skill to extract actionable insights. We lacked the ability for our finance function to play a proactive strategic role. And even thought people and culture must maintain a position of priority in any high-performance organization, so too must financial and operational data.
41% of the high-performing survey respondents also cited big data and analytics as “extremely important” as an enabler of lean finance and decision making mechanisms.
The planning and execution of your transformation mission will only be as good as your preparedness and the intelligence you gather from inside and outside of the organization. Without the proper tools and organizational structures in place, this will be a daunting task to say the least.
I can’t think of many organizations out there that don’t want to be more collaborative, more aligned, communicate better and improve trust and accountability. You don’t have to be a CEO or have a MBA to understand how all of those things—when executed well and ingrained in the culture—would lead to better financial returns. But many organizations struggle with their legacy systems and structures. They can’t—or won’t—move away from them and toward something better, because they worry about the unknown or about losing control. Or they lack the confidence to invest in more appropriate data-gathering tools - the people skilled enough to use them
A March 2013 Mckinsey&Company article by Dominic Barton and David Court titled The Keys to Building a Data-driven Strategy outlines this concept well. They detail three action steps organizations can take to make progress towards becoming more data-driven.
- The first step is to develop business-relevant analytics models that can be understood and put to use. The best way to do this is to gather intel from frontline managers so the tools mesh well with existing decision making processes (although some of those process will have to change).
- The next step is to embed analytics into simple tools for the frontline troops. The keyword here being simple. The goal is to provide intuitive tools and models that will improve their job functions and decision making capability.
- And third, to develop capabilities to exploit big data. To achieve this, it usually requires a multifaceted approach involving championing by senior leaders, training and rewarding new behaviors.
Common Features of a Data-driven Organization
There isn’t necessarily a singular path to becoming a data-driven company, but there are some common features and benefits shared by those that get it right:
- Data-driven companies value the ongoing sharing of information. Collaboration is a core tenant of the culture and it’s understand that all appropriate data should be accessible to anyone in an organization.
- Data-driven companies believe shared data should be made available to all employees This lends itself to improved situational awareness and performance at the individual and team level.
- They have the tools and skills to make sense of vast amounts of structured (data gathered in formal databases) and unstructured (information from emails or presentations for example) data to inform decisions and make transformation predictions.
- Data-driven companies make data collection a primary activity across departments – a behavior to be measured and rewarded.
- They have the ability to provide real-time insights as to where course correction may be needed or new opportunities seized.
- Senior leaders not only buy-in to building a data-driven culture, they evangelize it from the mountain tops.
- They use data to constantly diagnose exiting systems and processes. When a business case for change is made – it’s backed by data.
- They value transparency and encourage upward management and communication.
In 2012, The Economist Intelligence Unit performed a survey which was sponsored by Tableau Software (a vendor partner of my last company). They surveyed 530 senior executives from North America, Asia Pacific, Western Europe and Latin America across a wide range of industries. A key insight was that “the most successful companies have adopted a data-driven culture in which they maximize the use of data by providing necessary training and promoting the sharing of data across all levels of employees and departments.”
In all, 76% of executives from top-performing organizations cited data collection as essential, compared with only 42% from companies that fall behind their peers in performance. That said, like many of the principles I write about, they seem simple but are often difficult to execute, especially in larger companies that have seen relative success using legacy systems – or not using the advantages of big data at all.
Leading companies understand the importance of data and analytics and invest heavily in the tools and people required to leverage this opportunity. By building a data-driven culture, the entire organization understand data’s importance and base all decisions on actionable insights. This improves speed, efficiency, ability to predict outcomes and maneuverability during transformation.
All which have a positive impact on the bottom line and shareholder value.
