A company is considered digital if its business model and processes are digital. In general, data is a reflection of the business process, which in turn, is a reflection of the business model, and this is once again a reflection of the business strategy itself. While most companies acknowledge that we are now in the digital age, many sectors don’t reflect this reality.
Change is inevitable, but transformation is often slow
In a modern economy, digital maturity is a ‘must-have’ not a ‘nice-to-have’. Digitalization is essential to cater to today’s well-connected customer and align with present and future customer needs. Creative disruption led by technology has helped organizations reinvent processes, enhance quality and deliver consistency. Whether the goal is business growth or the creation of a flexible customer service model, digital tools have been crucial enablers of time-bound transformation.
Businesses that have no digital plan will, at some point, realize that the established ways of working may no longer deliver the results they seek. Merely tweaking existing processes won’t work; a comprehensive approach is needed to put the business on a long-term sustainable path.
The question is how soon and effectively can the business embark on this path. This is important because most companies are optimized to the environment in which they have been operating all these years. When that environment changes over time, they struggle to adapt and change. A digital strategy can help leaders steer the business on a path that moves them forward.
Businesses that are adaptable have the highest likelihood of success. They don’t succumb to creative disruption, but leverage it to exceed their efficiency and performance.
General Motor, Whirlpool, Boeing, Kellogg and Campbell Soup featured on the Fortune 500 list in both 1955 and 2014.
Studebaker, Detroit Steel, Collins Radio, Zenith Electronics and National Sugar Refining were on the Fortune 500 list in 1955 but not in 2014.
Facebook, Microsoft, Target, Office Depot and eBay were not on the Fortune 500 list in 1955 but they are among the globally-recognized brands on the list today.
In the next 50-100 years, you can expect many of the current Fortune 500 luminaries replaced by new companies. This is creative disruption and innovation at work – a testament to the unlimited possibilities of human ingenuity in pioneering technological advancement. To transition gracefully to a world of artificial intelligence (AI), robotics and big data analytics, businesses need a clear understanding of what they need to do and how best to do it.
Data holds all the answers
Attempting to transform without a digital strategy in place not only increases the risk of failure pretty dramatically but can also be painful for both leadership and employees. If you don’t have a framework, you won’t be able to rally people around positive change. Even if you do manage to get there, the path will be painful for everyone involved, leading to an overwhelmed workforce and burnt out executives, if they do stick around for the entire journey.
This is unnecessary when you have all the data in the world at your disposal and the tools and methods to harness the power of that data. Data analytics answers the ‘what’ and ‘why’ of strategy and execution. It allows businesses (and humankind at large) to answer questions that couldn’t be answered before, at a speed and scale that was unimaginable before. The accepted wisdom today is that data unlocks strategic value. By letting data rot until it is past its ‘usable date’, you can never acquire timely insights to take the best possible strategic business decisions.
How can you develop the best data strategy?
1. Be people-centric: The best data strategy is one that creates massive economic value while simultaneously serving people and communities in the ecosystem. This is possible by adopting a data-centric mindset, so your first task will be to take a people-centric view as it is the collective efforts of people that drive the organization. A people strategy must necessarily be integrated into the data strategy for it to work as intended. After all, it is your employees who will be working with data. These ‘datapreneurs’ should be tasked with harnessing data for value creation; the chosen individuals must be well-versed with the organization, systems, processes and data.
2. Have a measurable strategy: Data can also tell you whether or not your strategy is working and to what extent. By setting measurement criteria, you are also committing to changing the strategy when data reveals this is needed. To make informed, evidence-backed changes, consider measurements across a number of critical dimensions of your business, such as organizational units, geographies, product and service lines, and your application and technology landscapes.
3. Give data ‘board-level importance: Today, companies treat their data strategy every bit as seriously as their business strategy. This is particularly evident in traditional companies that have embraced data digitalization after seeing Digital Native companies rack up massive valuations exceeding their own. Consensus on data strategies evolve in the boardroom; key decisions on data must be taken by board members. For instance, to deliver greater value from data to shareholders, boardrooms can authorize actions that the company’s techies cannot, such as extending the lifecycle of the data value chain, overseeing the use of big data technologies in auditing, and taking the final call on strategies that can produce maximum value for shareholders.
Emerging technologies have increased business interest in big data. Unfortunately, businesses have primarily focused on various tools and technologies than on the strategy itself. The problem with this approach is that excitement around new tools often overshadows the very purpose of the technology – using data to create business value.
Companies that manage their data through superior data strategies are at least five to ten times more valuable than their peers or competitors. For evidence, look at the ten most valuable companies in the Fortune 500 list. These are the companies that have found their ‘billion dollar byte’, their most valuable data, which is easily reflected in their valuations.