Here at OrbitMI, we support many ‘data-driven’ companies but I found myself wondering recently what that actually means. All companies use data in some form but data-driven ones must use it differently than others.
Initially, I sought my answers in service of the omnipresent shareholder. Shareholders ask this of their company’s managers: to make the best possible decisions, in the shortest amount of time and with the least amount of expense.
Ultimately, I found my answer to be this: By being data-driven, a company improves its ability to do all those things, making it healthy, profitable, predictable and more innovative.
What, then, is a ‘data-driven’ company?
I discussed what data itself is in an earlier blog, comparing it with oil and matching different types of data with different grades of oil. Data can certainly give a company useful and valuable information and many people use the term ‘smart’ to describe data that had some preliminary processing when it was collected to improve its usefulness.
But for a data-driven company, that is not enough. Something more is needed, and that ‘something’ is wisdom.
Interpreting the data, applying it to the right processes at the right time and profiting from the outcome are features that no amount of smartness in the data can deliver.
At a domestic level, for example, data can tell you that a mortgage will cost, say, 4% a year, but it takes wisdom to understand whether that is a good deal for you. It is exactly the same in the corporate world: a data-driven company is one that combines data with wisdom to give it a context that will power it ahead of its competitors.
Yet in the maritime world, only a small proportion of companies are doing this, according to a shipping executive I spoke to when researching for this blog.
He based his measure on his own observation that very few maritime companies have put an executive in charge of their data strategy. That level of oversight is essential if a company is to be truly data-driven and the benefits of that strategy are to be realized, he told me. That need not be an exclusive role – it might be added to the CEO’s or a senior manager’s responsibilities, for example – but it needs commitment at that level if it is to be successfully implemented.
And the responsibility shouldn’t stop there. Individuals and team throughout an organization must be encouraged to find and use the power that comes from being data-driven.
In a data-driven organization, data is treated as an asset, just as its people are assets. With that culture in place, it can trust its people to use its data to bring objectivity to their decision making and transform how the organization works.
There will be less reliance on subjective consensus – which often produces the least-worst, rather than the best, outcomes – and It will not matter who has the loudest voice. Instead, decisions will be objective, based on data that all can see and which will serve as a rudder to steady or change the company’s course.
No longer will executives make important decisions based on data whose origins are unclear and if a team or product line seems to be underperforming, improvement plans can be based on data rather than trial-and-error.
Being data-driven also encourages upward reporting. In a data-driven organization, data is recognized as revealing facts that can be discussed and addressed without fear or favor. This cuts through nepotism and many other things that can slow a company’s development. Best of all, once all those obstacles have been removed, it frees up time: time for more business development; more product design; more customer contact; more revenue.
Data-driven firms embrace sharing and encourage openness. Data sharing does not mean relinquishing its control. It is as if you are viewing a painting in a gallery and discussing what it means to each of you. It is a shared experience that benefits both parties. Thus, when two data-driven companies work together, they do so as partners by sharing data.
OrbitMI commissioned a report that revealed the huge potential benefits across the industry from sharing data, which you can obtain via our website.
Data-driven companies are also aware of the potential liabilities of handling data. Some data must be stored in certain ways for certain time periods and some must be available to auditors at a moment’s notice. And some – such as personal customer data – cannot be shared with anyone, even inside the organization.
For those readers whose companies are not data-driven: you are in the majority and there are companies out there – such as OrbitMI – that have tools to will help you reach that goal.
Don’t be put off by worries about the liabilities that holding and using data brings because all companies must put in place policies and practices to ensure compliance with data regulations. But data-driven companies do not stop there: they make that essential good governance a foundation on which to build a corporate culture that nurtures processes to support all those using the data.
This is where the committed leadership I mentioned can have a real impact. Those senior people understand that when data is properly handled, it can position and maintain their organization ahead of its competitors. Data-driven companies are faster, more profitable, leaner and, in some cases, meaner. In the maritime sector, this offers huge potential, not least because so few are grasping this potential.
This may have an impact on how a company plans its staff structure. In an earlier blog I discussed how data-driven companies are adopting new priorities in their searches for talent to suit a data-driven structure and how its recruits have their own expectations of the companies they join. What is clear is that being data-driven is not about reducing headcount; it is about combining the strengths of both staff and data to achieve long-term corporate goals.
This is not a passing phase. Like the advent of the internet and the World Wide Web, there was a period of transition to reach today’s reality that no business could survive without emails and websites. So, too, with becoming data-driven: eventually, all companies will have to work this way if they want to expand their services, product lines, profitability and sustainability.
Start that journey and follow it to its destination. If not now, when?