Placing data at the heart of your business – data centric

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data centric

Being data centric, placing data at the heart of your business.

At the end of 2016 McKinsey Global Institute released – The Age of Analytics report.
In it they revealed:

  • The biggest barriers companies face in extracting value from data and analytics are organizational; many struggle to incorporate data-driven insights into day-to-day business processes
  • Leading companies are using their capabilities not only to improve their core operations but to launch entirely new business models. The network effects of digital platforms are creating a winner-take-most dynamic in some markets.
  • Data and analytics underpin several disruptive models. Hyperscale digital platforms can match buyers and sellers in real time, transforming inefficient markets
  • Above all, data and analytics can enable faster and more evidence- based decision making.
  • MOST COMPANIES ARE CAPTURING ONLY A FRACTION OF THE POTENTIAL VALUE OF DATA AND ANALYTICS

Data academy

So it was great to see Marks & Spencer (UK retailer) launching the first Data Academy for retail, upskilling 1,000 staff as part of its data skills initiative.

Steve Rowe, chief executive of Marks & Spencer said:

“Transformation of our business is key to survival and a huge part of this lies with our colleagues,”

“We need to change their digital behaviours, mindsets and our culture to make the business fit for the digital age..”

What we’re witnessing is the rise in the data haves and the data have-nots, not just acquiring and reporting on data, but the empowering of staff, letting them ask questions of the data in order to move at pace, create better and more fluid ‘experiences’ for customers, new business models exposed by data, and enabling them to drive limited resources to the right areas of the business in order to change and grow.

Note how Steve Row mentions “…digital behaviours, mindsets and our culture…”

Mindset. This is a key differentiator, he’s not saying it’s a tech led initiative and it’s not just having the data, it’s about the people and their attitude and aptitude toward data.

Data architecture

Data architecture has been consistently identified by CXOs as a top challenge to preparing for digitising business as was stated in McKinsey’s Why you need a digital data architecture to build a sustainable digital business

“Leveraging our experience across industries, we have consistently found that the difference between companies that use data effectively and those that do not translates to a 1 percent margin improvement for leaders. In the apparel sector, for instance, data-driven companies have doubled their EBIT margin as compared to their more traditional peers.”

“Using data effectively requires the right data architecture, built on a foundation of business requirements. However, most companies take a technology-first approach, building major platforms while focusing too little on killer use cases. Many businesses, seeing digital opportunities (and digital competition) in their sectors, rush to invest without a considered, holistic data strategy.”

Maybe using data effectively is as much about the breadth and depth of how it’s utilised by people across the organisation, especially as machine learning and AI accelerate.

Which segways nicely into data strategy…

Data strategy

No action without insight.

An HBR post entitled What’s your data strategy provided some insights into what’s typically missing when organisations consider data. They said:

“Cross-industry studies show that on average, less than half of an organization’s structured data is actively used in making decisions—and less than 1% of its unstructured data is analyzed or used at all.”

“More than 70% of employees have access to data they should not, and 80% of analysts’ time is spent simply discovering and preparing data”.

They break down what they term as The Elements of Data Strategy into two parts; Defense and Offense. A company will migrate across the spectrum of Defense and Offense dependent on things such as the company’s overall strategy, its regulatory environment, the data capabilities of its competitors, the maturity of its data-management practices, and the size of its data budget.

I’d also add that it should also look at the capability and empowerment of it’s staff in this regard, after all having the tools is one thing but knowing how to use them and the questions needed before deploying them has to be key. Critical thinking from a data perspective if you like.

Data is cheap, strategy still matters. So does education.

data mindset ven diagram

Data ‘Mindset’ at the heart of your business

To most people data is boring, cold, clinical and at times intrusive, but if you embed a culture of ‘data first’ as we have to date with ‘digital first’ how might that change your business?

What if your staff already know what data is important and naturally or instinctively use it in the right way, then data surely becomes the beating heart of your organisation. Action the data in a fluid way not just report on it, flip the 80% discovering and preparing into ‘doing’, ‘learning’ and ‘doing’ …rinse and repeat.

 

 

 

If you’re running innovation or business model workshops in your organisation and looking for a canvas to help you put data at the centre take a look at our canvas at Crank. Email me if you want to know more about how it’s used.

Data centric canvas

Data centric business model canvas

You can read more about  data and business agility in the book.

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In Order to Scale You Have to do Things That Don’t Scale

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Airbnb and scale

Large organisations are pretty obsessed with scale, and naturally so in many instances. Ideas need to have big potential impact, returns need to be sizeable, programmes and projects need to work robustly across large numbers of employees or customers. It’s an inherent part of the mindset.

But what happens when you need to start small? And what happens when you need to do something that doesn’t scale? I loved the story that AirBnb founder Brian Chesky tells (in this Masters of Scale podcast) from the earliest days of the service when they were still part of the Y-Combinator programme. Paul Graham (founder of Y-Combinator) had asked him where they were getting traction with their idea. Brian told him that they didn’t actually have a lot of traction at the time, but they did have a few people in New York who had started using the service:

Graham: “So your users are in New York and you’re still inMountain View.”

Chesky: “Yeah.”

Graham: “What are you still doing here?”

Chesky: “What do you mean?”

Graham: “Go to your users. Get to know them. Get your customers one by one.”

Chesky: “But that won’t scale. If we’re huge and we have millions of customers we can’t meet every customer.”

Graham: “That’s exactly why you should do it now because this is the only time you’ll ever be small enough that you can meet all your customers, get to know them, and make something directly for them.”

So the founders literally commuted from Mountain View to New York, and went door-to-door meeting the Airbnb hosts in person. To give them a reason for visiting they personally offered to photograph the host places for the site. When they’d talk to the hosts they would get direct feedback that enabled them to start designing ‘touchpoint by touchpoint’ in order to handcraft the user experience and feed directly into their product roadmap (‘the roadmap often exists in the minds of the users you’re designing things for’). Almost all of the early features that would become critical to Airbnb’s success came from that early feedback.

As Airbnb grew, that habit of handcrafting the user experience stayed with them as they visualised what a truly exceptional experience might look like in order to challenge thinking, and work back from there to deliver a service that is truly remarkable:

‘The core thesis is if you want to build a massively successful company, you need to build something that people love so much they tell each other. Which means that you must build something worth talking about.’ (Chesky)

It’s too easy in large organisations to dismiss doing things that don’t scale. Like talking face-to-face with your earliest users to craft remarkable experiences. It’s too common for leaders, as they progress higher up the hierarchy, to become more and more distant from actual customers.

We need to challenge these conventions.

And that’s as much about culture and mindset as it is about process and practice.

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The Arrogance of Corporate Scale

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As companies grow larger it becomes ever more difficult for them to retain the right balance between ambition and humility, external curiosity and inward focus, restlessness and complacency.

Market dominance and scale can easily turn into corporate arrogance and lack of urgency. The pressures brought by demands for ever greater scale and efficiency are a catalyst for internal politics, bureaucracy, managing upwards, and internal focus. Hubris can cause poor listening and analysis, missed opportunities and kill the ability to reinvent.

The opposite, in other words, of the qualities of organisational longevity listed by Arie de Geus in his renowned book on The Living Company. Qualities like the ability to learn and adapt from being sensitive to your environment, showing tolerance for experimentation and different thinking, retaining a strong, cohesive sense of identity, to be adept at managing resources to enable flexibility.

A comprehensive study by the Telfer School of Management at the University of Ottawa into the implosion of Canadian Telecoms giant Nortel gives us some stark lessons. The researchers interviewed 48% of all the Nortel executives who were in charge of the company from 1997 through to 2009 when it filed for bankruptcy, and spoke to executives at 53 different companies that were customers of Nortel in that time.

In spite of the rapidity of Nortel’s decline, they found that corporate failure is a long and complicated process dependent on multiple accumulating factors. When asked about Nortel’s biggest management failure however, the study’s lead author, Jonathan Calof, said:

“There were three major factors that caused the failure. When Nortel was a market leader in the ’70s, it developed an arrogant culture, which led to poor financial discipline. Then in the ’90s, it focused so intensely on growth that it broke its ability to innovate and read the market. And after the tech bubble popped, it turned inward and cut costs to the point where it alienated customers.” (Calof, 2014)

Arrogance, pursuing growth at all costs, efficiency at the expense of innovation. Many of these problems were seemingly originating from a culture that became baked into the company long before it was in trouble, and served to reinforce the kind of toxic assumptions that can become powerful barriers to change. Assumptions which damaged the business and brought focus away from where it needed to be and created an internally facing company:

“It escalated into hubris to the extent of making it especially difficult to absorb acquisitions, to quickly respond to market needs, and to accept and understand what customers wanted (largely as result of the delusion of ‘we know better’).”

As businesses become leaders in their market it’s very easy for them to become blinded by conceit. For the language of leadership to slip into the language of arrogance. As they become overly focused on growth it’s very easy for them to become parochial and lose sight of what really matters. As they pursue efficiency gain over forward thinking it’s very easy for them to become internally focused. For informal reward systems (such senior management attention and recognition) to subtly put a premium on inward-looking management. The potential for rapid disruption that digital has brought to so many markets serves only to amplify the impact of such misaligned corporate culture.

Be bold, be proud, be ambitious, but never be too arrogant.

This extract is taken from our book, Building The Agile Business (Kogan Page). Do join our community to access exclusive content related to the book.

Leading Teams Through Uncertain Times

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When the environment is volatile and complex we need a different kind of leadership

We hear so much about the accelerated rate of change that so many businesses are struggling to deal with right now and the need to lead teams through periods of high volatility and uncertainty. The Kübler-Ross Grief Cycle is a relatively well-known way of thinking about the more emotive responses to high levels of change and unpredictability.

Our initial response may well be founded in shock and even denial that the change is even happening. The leadership response to this should be founded in clear messaging and signals about the reality of the need to change.

We then may react with anger and frustration, which calls for understanding but also communication and information.

Some may feel overwhelmed by change, and even slightly lost, in which case coaching and support will help.

The importance of storytelling, shared experiences, guidance and direction to help people to find their own meaning in the change and eventually to accept and move on.

It’s a great way of thinking about the stages of change but of-course the reality of the transformation that many organisations are undergoing is less of transition from A to B and more of a journey to become a business that in itself is characterised by continuous change. So the point that many miss is that a leader trying to navigate this process will likely find that they need to deal with these reactions from many different sources and all at once.

The real skill in leading through times of high uncertainty is being highly tuned to the emotive context of our surroundings. To have empathy. Sure, we need clear direction, continuous communication, shared learning, accountability, openness and transparency, and a bias towards action, but we also need the emotional intelligence to understand the support that people really need to come on the journey with us.