This blog is written by Data3 Founder and CEO, Helen Tanner.
Do you have a data strategy? Or, in simpler terms, do you know what you want to achieve with data for your business? For instance, what your vision is, what your objectives are, what the outputs will be, what your goals are, what resources you need, what technology you’ll use, how much it will cost, what the risks are, and so on. If not, you are likely to end up doing nothing.
Or, even worse, you’re likely to deliver a range of tactical, isolated, disconnected things with your data, potentially making your data challenge even more complex to solve in the future. Plus, there’s a risk that you could introduce more risk and cost, into your business as a result of not thinking things through properly.
Don’t worry if you don’t have a data strategy – you are not alone. Most businesses do not have a data strategy. So, let’s create a data strategy now…
There are three ways to start defining your business’ data strategy:
- Top-down – where you use the business strategy to inform the data strategy so, the data strategy becomes a sub-component of the business strategy.
- Bottom-up – where data insight is used to inform the creation of a data strategy and this then informs the business strategy.
- Hybrid – where you use a combination of a top-down and bottom-up data strategy development approach.
Each of these methods are a good ways to build a data strategy, so let’s explore each one in turn.
A top-down data strategy starts with your business strategy. So, the first action is to review your business strategy document. But what if you don’t have a business strategy yet? Or, if you do, perhaps it’s unavailable, incomplete, or out of date? This is where you can use a business strategy workshop to gain strategic input from your business leaders instead. The questions you’ll want to ask your business leaders are:
This top-down approach will help you to see where data can be used to support your business strategy, so your data strategy can be complementary and aligned. Your data strategy NEEDS to power your business strategy, to be successful. Both in terms of your data outputs, and politically as well – your stakeholders need to see data as part of the solution for business growth, instead of an isolated or separate business task. It’s imperative you have to buy-in of your senior leadership team right from the start.
A bottom-up data strategy starts with the data – using data to inform the business strategy. So, this starts with the data and the insight that already exists within your business. To collate this data and insight, you’ll probably need to speak to different people across your business, as often different people are holding different parts of the data puzzle. This could include your data team, if you have one, your customer service team, finance team, sales team, marketing team and so on. You’ll need to ask them about the data, and the insight they have derived from the data, in their business areas.
Ask each business area about what they know, based on data, and what they don’t know. Here are some examples of how the answers are likely to vary, significantly, depending on who you speak to. So, make sure you speak to all the core business areas.
|BUSINESS AREA||WHAT DO YOU KNOW?||WHAT DON’T YOU KNOW?|
|Customer Service||How many customers we have; Who calls us the most; Who complains the most; Variations by hour/day of the week;||How customers have changed over time;|
Who our high-value customers are; Who are the good/bad payers; Who attends our events;
|Finance||How much revenue we receive; How much we spend; Which clients are good/bad payers; Variations by product/location||What revenue will be next month/year; What the cost per acquisition is; How profitable each customer is; How efficient our people are;|
|Sales||Number of leads generated; Lead-to-sales conversion rate; Number of new clients every month; How satisfied customers are;||How profitable each customer is; How long customers stay with us; Who engages with marketing activity; Who attends our events;|
|Marketing||How we segment our customers; How many customers engage with us; How many customers attend events; How many leads we generate;||What the ROI is for marketing activity; What our cost per acquisition is; Who are our highest value customers; How many leads convert to sales;|
|Human Resources||How many staff we have; How much we pay people; How many sick days employees take; Which employees are poor performers;||Which employees generate the most sales; Which employees offer great service; Which employees engage with the Board; Which employees might resign;|
This data can be used to inform the data strategy, and ultimately the business strategy, as it will show you the current facts and figures available across the business, as well as the gaps and potential data opportunities.
This is a combination of the top-down and bottom-up approaches to data strategy development. And this is our recommended approach. The top-down approach will ensure that you’re aligned to the business strategy, and to your strategic business requirements. The bottom-up approach will ensure that you don’t duplicate, or ignore, what’s already been done.
Which one should you do first? It depends on your business and your role. If you believe that you will receive good engagement across the business, then start with the bottom-up approach and use the information you learn to run the top-down data strategy workshop with your business leaders – this will mean that you know what you’re talking about, which will inspire confidence in your ability to implement the data strategy.
If, however, you think you need senior leadership buy-in, in order to be able to fully engage all business areas for the bottom-up approach, you will need to start with the top-down approach first. Once you have senior leadership commitment, you then have the mandate to run the bottom-up approach across all business areas.
In both cases, your data strategy should evolve as you bring in both the top-down and bottom-up components. Regular iteration of your data strategy is the key. So, keep an open mind throughout this process and try not to jump to early conclusions.
You can now consider where your business is on a data maturity curve today:
Data Novices tend to be either established businesses or scale-up businesses:
• Established businesses that have grown beyond their original data architecture over the years and are now at the point where they need to invest in data to support their larger business and future growth plans. They are likely to see data as a problem because different people are quoting different numbers and there’s no single source of truth within the business. They may also feel vulnerable around how robust and secure their data is, as well as being concerned if they’re compliant with data regulations.
• Scale-up businesses that have grown fast and the data architecture now needs to catch up to ensure that their data is robust, secure, and compliant. They are likely to see data as an opportunity if they can get it right – an opportunity to make more money and power their business growth. An area for investment.
Data Users tend to be businesses, who have identified that data is a problem or opportunity and they’ve started on the journey to fix it. They are likely to have bought licences for third party data tools, created a data warehouse, recruited a team of people to look after data, and started improving their data governance and documentation. Data will be mentioned in their business plans. Reports and dashboards will be shared across the business.
Data Experts tend to be businesses that have invested significantly in data through people, training, tools, and strategic projects. They are likely to have a Data Director, or Head of Data, empowered with a decent-sized team, a budget, training schedule, and cutting-edge artificial intelligence and machine learning tools at their disposal. Data will be a core part of their business strategy, customer offering, and shareholder updates. Data-driven analytics will be routinely used across the business to inform business decisions.
Data Leaders tend to be businesses that are presenting at data conferences, launching data-driven market-leading services for customers, and widely regarded as global data innovators. They are likely to have a Chief Data Officer or a dedicated data-role on the senior leadership team. Data will be a core part of shareholder updates and innovation development.
So, where is your business on the data maturity curve today? In my experience, most businesses are low down on the maturity curve and moving from being Data Novices to becoming Data Users through the creation of automated data reports and dashboards. Some businesses are moving from being Data Users to becoming Data Experts through the creation of a single view of the customer and using predictive tools. Data Leaders tend to be the minority of businesses who have heavily invested in data in the last decade or brand-new start-ups built with a data ethos right from the start.
Now you can consider where you’d like your business to move to on the data maturity curve within the next year, five years, or a time period of your choice. Your decision needs to be based on what’s realistic for your business. Consider where you are today, how much your business is willing to invest, how high data is on the priority list, how much support there is from the senior leadership team, and the timeframe you want to focus on. This will give you another goal to add to your data strategy and a target for your stakeholders.
What is a data strategy? Is it a 50-page document? Or a 10-slide presentation?
It could be either – there is no one-size-fits-all data strategy, as it needs to be tailored for your business. But there are some core areas that should be included within your data strategy including:
- What’s the primary purpose of this data strategy?
- How does the data strategy help the business to achieve the business objectives?
- Are you maintaining, evolving, or transforming what you do today?
- Is there a metric or key performance indicator you want to hit?
- What does good look like?
- What’s the ultimate end goal for the data strategy in 1/5/10 years?
- How will the business be improved because of this data strategy?
- Where are you now on the data maturity curve and where would you like to get to?
- What’s in and out of scope?
- Does this data strategy cover all locations/products/departments?
- What data sources are included across your business areas/tools/platforms?
- Is there a limit on what data will be included?
- What are the quick wins?
- What are you doing first/second/third?
- Why have these areas been prioritised?
- Why have other areas been de-prioritised?
- How will you comply with legal and regulatory rules?
- How will you handle data security?
- How will your data strategy support your brand and values?
- What documentation and user guides will be produced?
- How will your data skills change?
- Will you use in-house resources vs external resources?
- Will you use your current team or recruit new people?
- What training and upskilling will be required?
- What are the costs over time?
- What are the costs for resources, third party tools, licenses, training, etc?
- Are there any cost savings?
- Are there any cost uncertainties?
- What tasks will be required?
- Who will do the tasks?
- When will they do the tasks?
- Is there any contingency built-in?
- Are there any compliance risks?
- Are there any commercial risks?
- Are there any people risks?
- Are there any issues that could impact the successful delivery of the data strategy?
As you can see, your data strategy requires significant effort, research, preparation and thought. Whilst your data strategy could be created in a day…The knowledge and thinking could take you some time to work through both individually and with your stakeholders.
I love a one-page data strategy – because if you can’t explain your data strategy on a page, you’ll never be able to explain it to your Board, leadership team, or key stakeholders. Whilst there will be a lot of detailed content that sits behind your one-page data strategy, I highly recommend you to create one for situations where you have limited time with key decision-makers.
By defining your data strategy, you will know what you want to achieve with data for your business. You will be able to share your vision, show your objectives, list the planned outputs, target specified KPIs, list your resource requirements, outline your budget, and explain the risks to your business. Can you see how this clarity will significantly improve your ability to win the hearts and minds of your leadership team and stakeholders?
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