Here at OrbitMI, we're involved with many ‘data-driven’ companies, but I often find myself wondering what exactly that means. After all, all companies use data. That must mean that data-driven ones use it differently than others, right?
My initial impulse was to frame the question in the terms of the shareholder. Shareholders oblige their company 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. As we say here at OrbitMI: being data driven helps you see the big picture.
How then, do we define a ‘data-driven’ company?
Guest author Paul Gunton discussed this in an earlier blog, comparing data with oil, and matching different types of data with different grades of the stuff. Data can certainly give a company useful and valuable information and many people use the term ‘smart’ to describe data that has had its utility increased through some kind of processing or refining.
Yet that is not enough to make a data-driven company. The recipe requires one more ingredient: wisdom.
Without interpreting the data, applying it to the right processes at the right time, and profiting from the outcome, raw data is nearly worthless
Being data-driven requires the generation of insights and the creation of context. For example, raw data might tell you that a certain job pays $15 per hour, but it takes wisdom to determine if such a job is viable for you. It is exactly the same in the corporate world: we cannot treat raw data as a silver bullet that will immediately solve our problems. Instead, we must be informed by that data; a data-driven company is one whose wisdom informs and contextualizes data in order to generate optimal outcomes that help power ahead of the competition.
Yet in the maritime world, only a small proportion of companies are doing this, a claim supported by the fact 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. Of course, such oversight can manifest in various different ways— it might be added to the CEO’s or a senior manager’s responsibilities, but it needs some form of commitment at that level if it is to be successfully implemented.
And the responsibility shouldn’t stop there. Individuals and team members 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.
With data-informed decision making, there will be less reliance on subjective consensus and decision by fiat, strategies which often produce the least-worst, rather than the best, outcomes. With data guiding the decision process, it will no longer 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. In this way, being data-driven creates stability within a company.
Executives will no longer make decisions guided by data on unclear origin, and if a team or product line seems to be underperforming, improvement plans can be based on data insights rather than blind 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 anxiety or favoritism. This ultimately reduces things like nepotism, as well as a variety of other negative practices 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. However, data sharing does not mean relinquishing control over it. 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. This in turn increases the value of the data, and further enables informed and efficient decision making.
OrbitMI commissioned a report that revealed the huge potential benefits across the industry from sharing data, which you can obtain here.
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, and begin your transformation.
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. Yet 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. Experienced leaders understand that when data is properly handled, it can position and maintain their organization ahead of competitors. Data-driven companies are faster, more profitable, leaner, and more competitive. In the maritime sector, this offers huge potential, not least because so few are capturing this potential.
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, then when?