Companies are accumulating more data every day, but most of this data sits in data reserves adding zero value. Platform economy giants have increasingly fuelled their growth with data and are now the largest companies in the world in terms of market value. These companies have been smart about the way they manage data and convert it into new business, with data-strategic thinking at their core.
Literature on digitisation, AI and data all reiterate how significant and even vital data strategy is to many companies. Even Europe has its own data strategy. The importance of managing data is further emphasised when a company profiles itself as a data-driven business, that is, one that makes decisions and acts based on data. Having a data strategy becomes even more crucial if that company wants to turn the data it has gathered into revenue. However, most companies have not defined their data strategy holistically, but more from a technological point of view.
In my previous life as a business consultant, I helped numerous businesses formulate their own data strategy. I noticed that the maturity of companies in terms of data use and new data-based business operations varied widely – as did their need for a data strategy.
Data strategy means different things to different businesses.
- One business’s goal may be to understand what types of data they hold.
- Another’s may be to manage master data.
- And a third may seek to analyse and define new business opportunities through AI.
Data strategy is not the exclusive domain of the Chief Data Officer; it is relevant to the entire organisation. It is not only about technology, although often the framework for the data strategy is quite technology-centred. The development of processes and operating models may be embedded in the framework adopted; however, even so, the data strategy should be approached from a wider perspective. How do you create a feasible data strategy that has a scope wider than mere technology?
Directors may wish to consider at least the following.
- Define the purpose of the data strategy.
- Define the value added by the data strategy to your business and the ensuing opportunities.
- Analyse the current level of your company’s data use, articulate the targets and draw up a road map.
- Define the practices, responsibilities and processes regarding data management, data governance and data quality.
- Make sure your data has clearly named owners. For example, the responsibility for any financial or production data lies with the respective business departments, not the data management team or IT team.
- Chart your company’s skills base that supports the implementation of the data strategy.
- Learn about the regulatory framework relevant to your industry.
- Establish technology policies.
- Decide which data you need to source from external providers and which data you could share with your partners.
- Consider whether you could sell your data or resell data you have sourced from elsewhere and refined.
If your data strategy is too technology-oriented and mainly the remit of the CDO, you are much less likely to unlock potential revenues. A good data strategy helps your company better understand and utilise the data it has, identify gaps and ease the sharing of data through ecosystems.
A data strategy can serve as a springboard towards new growth opportunities within the data economy and helps you overcome crises.
Pioneering companies put CSR at the centre of their data strategy
With the crisis brought on by the COVID-19 pandemic, people have increasingly found it in themselves to pull together, at work and in their private lives. Besides surviving the challenging times, many companies have also started to think about what they could do as part of the community to support everyone’s recovery and what their responsibility during a crisis is.
Data as an element of corporate social responsibility (CSR) is still a new idea but, for example, OP Group’s Data Balance Sheet is a sign of things to come. An increasing number of customers demand more transparency in how companies use data as well as an opportunity to influence the use of their data. In Sitra’s Making data part of CSR workshop series the aim was to identify and implement the best practices of sustainable data use from the perspective of CSR as a joint effort with pioneering companies.
My message to company directors is to keep an open mind and broaden the concept of their strategy to include CSR. The responsible use of data builds trust among customers, partners, and investors. A holistic data strategy will be the key to success in the fair data economy of the future.