Key components of developing the right data strategy
What does your company do?
That was a trick question. It doesn’t matter what you think your company does, it’s going to have to turn into a data company soon, if it hasn’t started already, in addition to continuing to provide your core product or service. This may sound daunting, but it’s a good challenge to have and one that will ultimately improve your offering, delight your customers, increase stickiness and adoption, and keep you competitive in a changing data landscape.
In this article you will read a brief overview a data strategy's key components: what a data strategy has to encompass, vital considerations when dealing with data, and who the main players are when it comes to executing your data strategy.
Data strategies for the uninitiated
First off, 'So, what even is a data strategy anyway?' Everyone knows that data is important for organizations to make money, but just having a bunch of data is useless without a data strategy. A data strategy deals with all aspects of your data: where it comes from, where it’s stored, how you interact with it, who gets to see what, and who is ultimately in charge of it. This sounds like a tall order and you may be thinking 'Oh man! Is that my job?' Depending on your company’s level of data maturity, it might not be any one person or department’s job (yet). But you do need to start coming up with answers to all of these tough questions.
“Everybody is going to assume that somebody else is taking care of the data, and the result is, nobody does”. - Charles Holive, Managing Director for Sisense’s Strategy Consulting Business.
That’s a bad situation, and you definitely need to know who’s in charge of what data. However, one of the first questions you need to answer as you build your strategy is 'So, what do we want to do with all this data? Why? And how will this make us money/delight our customers?' Those answers ultimately have to come from the business unit that has the idea for making money/delighting customers in the first place: 'Internal data is owned by the function that creates it. It all sits within IT, but sales should own sales data, marketing should own the marketing data…'
These departments should also own the efforts to use that data to create new revenue, engagement, etc. A common misconception when it comes to data strategies is that they should be these all-encompassing, top-down initiatives that come from an all-seeing, all-knowing Chief Data Officer (more on this later), when actually you can, and should, build your strategy piece by piece and that the process should be driven by the areas who have the data in the first place. Whatever the initiative is (surfacing user data to inform them about their buying habits, etc.), the department with the data and the idea for using it should drive it. This increases ownership within the department and prevents the 'whose job is this?' question.
Diversifying your data
Once you’ve got your initiative in mind, it’s important to think about what data you need for it. The two main kinds of data your company has will be the data you generate and own and the data your customers generate, which you are only the custodians of (they own it). Whatever you plan on doing with data, this is the time to make sure that you are legally within your rights (consult your company’s legal department, counsel, etc.) and make sure that your user agreement contracts are properly worded to allow you to do what you want with the data you have.
There’s a third type of data your company can and should be thinking about for your data projects, and that’s third-party data, which can be used to add context to your datasets. More and more companies want to augment the context of their data. In healthcare, for instance, a hospital only has access to about 2% of the data on its patients, which is created while they are physically in the hospital. They are missing the other 98% of the data that is generated everywhere else. Their eating habits, buying habits, some of this could be useful to help provide better care.
As the outlook on data shifts from a company-centric to an ecosystem-spanning view, more and more companies will buy, sell, trade, and partner with other companies for access to the data they want and need to augment their datasets, deliver more value, and maintain a dominant position in their industries.
Key players for implementing your data strategy
Now that you know where the data strategy starts, who’s responsible for implementing it at the department level, and how to safely and responsibly use the data you’ve got, it’s time to talk about the key players within your organization who will help keep everything running smoothly. These are the business unit stakeholders, data professionals pulling the data together, and maybe the Chief Data Officer if your organization has one. The first one, we already covered: whoever came up with the idea for how to use your data (and whatever data you can get access to) should own the execution of that plan.
They’ll need support from your company’s data experts: the IT department and data engineers (if you have them). These folks will walk the team executing the plan through the specifics of where the data is and how to access it. Additionally, they’ll make sure that the company has the analytics platform needed to pull it all together and present meaningful insights to your users. They may even be instrumental, along with product team members, in helping create embedded analytics that will live right inside your product or service.
Lastly, we should discuss the Chief Data Officer (CDO). As previously discussed, this person is not the be-all-end-all of your data strategy. Many businesses, right now, may not even have a CDO, but when you do get one, they will wear a lot of hats within the organization. Their first job will be to look at all the data your company has and how it’s all being used and make sure that the processes in place make sense and are working. They will also check in with legal and make sure that data is being used in a way that’s compliant and that all user agreements are properly worded to protect users and the company. The CDO will also look for ways to augment your data holdings (through buying, partnering, etc.) to keep expanding the ways your company can use data to increase revenue.
Data strategies and culture
A final, vital aspect of the CDO’s role is a cultural one: they have to assess the organization and make sure that everyone using data has a mindset that prioritizes the security of the data, but also the opportunity that it represents for the company. Every company is becoming a data company and the financial incentives are too huge to ignore: ´The market for monetizing data and insights is getting so big. Depending on what you read, it’s between 20 and 36 billion dollars over the next three or four years´.
Business teams need to understand this and be serious about getting the most out of their data. Dragging your feet or being half-hearted about it will not do: 'If someone says ‘the way I’ve made money before is the way I will make money tomorrow,’ I say ‘well, I’m not going to invest in your company.’ I know five years from now, someone’s going to get to your data and create much more value than you do with your transactions'.
Encouraging a culture of experimentation is key to finding new ways to use data to drive revenue and keep your company competitive. Charles suggested finding ways to make building new apps and projects with data as easy as possible, so that people across the company can build quickly and fail quickly, to find their way to solutions that will ultimately pay off for users and the company.
What will your company do?
By now your head is probably spinning with all the potential challenges and opportunities of your data strategy (whether you had one when you started reading this article or not). If your team isn’t doing stuff with data right now, start asking the hard questions as to why that is and how you can change it. If your company doesn’t have the tools to build the analytics functionality you need, figure out how to get them. Whatever you have in your imagination, start building it. If you don’t, someone else will.
Author: Jack Cieslak