What is Data Strategy?
I listened to a TED talk the other day where the speaker (Jennifer Zhu Scott) made an interesting observation – that data has, in the past 20 years, emerged as an asset that delivers deep customer insights,
significant operational efficiencies, and immense top-line growth for businesses. Her comment echoes the notion expressed by Ben Marr (author of the book “Data Strategy”) – that every business is, in reality, a data business.
This shouldn’t be news to us, when four of the top five most valuable companies in the world’s business models rely heavily on data: Apple, Alphabet (Google’s holding company), Microsoft and Facebook. I’d like to point out that these four powerhouses are all in different industries, which implies that each of them lead their respective industries due to how well they use their data. They place high strategic value on data and make it part of their business decisions, internal operations, and their value propositions. In short, they have a very effective data strategy – and it shows.
Introducing the Data Strategy
A data strategy is a dynamic strategy centred around the effective use of data within an organisation. This is somewhat different to a data management strategy, which is driven by the Data Management Book of Knowledge (DMBOK), managed by the Data Management Association (DAMA). Unlike the DMBOK which focuses on governance, security, quality management, and documentation, a data strategy focuses on how data is used effectively within this framework as its foundation.
According to Marr, a good data strategy focuses on using data within three focus areas:
- Making better business decisions
- Improving operational efficiencies and customer value propositions
- Monetising the company’s unique data blend
A data strategy’s aim should be to effect change in one or more of these areas. As business growth is achieved, the strategy should be updated to ensure continuous Return on Investment (ROI) on the projects that emanate from it.
Can a Company Afford Another Strategy?
Strategies come and go as top management is shuffled or replaced. Strategies look nice on the boardroom whiteboard, but hardly finds the value it was supposed to deliver in its implementation. In short, strategy has suffered a bit from Sun Tzu’s days. So, does your company really need another strategy? Well, no. A company needs one overarching business strategy that guarantees success through its implementation and keeps up with company growth and market influences. A data strategy (as with any supporting strategy such as HR, Finance, Sales and Marketing, IT, Governance and Risk, Technology, and so on) aims to support this strategy in its implementation.
Here’s an example:
A pharmaceutical company wants to achieve 15% growth in sales, through retail pharmacies. If their Business Development team is already at capacity, they will need to hire the right skills, train them quickly, give them the tools and send them to the areas where they can generate the 15% growth – in other words, a supporting HR strategy. While this approach is not wrong, the pharmaceutical company can benefit as much (if not more) with a supporting Data strategy.
A quick overview of the issue at hand brings forth several key questions. To highlight a few:
- Which skills should we hire?
- How does past success look like in terms of current staff?
- Which areas are ill covered by our current Business Development team?
- Which products are under-valued in the market?
- Which products should be positioned together for gearing?
- Which products are most likely to “win?”
These questions should be answered by analysing relevant data. For instance, if you have data regarding your job descriptions and staff attributes as well as performance metrics you will be able to assess which
attributes are key for success within a given job description. Or, product sales data can assist in answering the last three questions through association analyses and time series analyses.
If you have a clear business strategy, a good, supporting data strategy gives the business the best chance for success. It enables all other strategies and ensures the business becomes focused on data for its success (like Amazon, Apple, and Google did).
Linking your business strategy with your data is something every business must prioritise. Within the exercise lies a wealth of learning. If the exercise only leads to an understanding of which data you do not have but need, then it is a win. If the word strategy throws you, call it whatever you like. The fact is that every business is a data business and should harness their data to its limitless potential.
Written by Jannie Els