Big data and advanced analytics are propelling the next wave of business transformation – endowing organizations with deep and actionable insights into customer preferences, market opportunities, and value drivers. But for many businesses, the benefits of big data have not lived up to the hype.
If big data holds such transformational promise, why is it transforming so few companies? Our work with dozens of leading companies points to an inescapable conclusion: CEOs and their top teams must play a hands-on role in providing strong, visionary leadership and driving cultural change in order for big data to fulfill its promise.
Big (Unmet) Expectations
Executives certainly hold positive views on big data’s value. A recent Economist study found that 48 percent of executives believe big data will be a useful tool, and 23 percent of executives say big data will revolutionize the way businesses are managed.
However, a lack of executive understanding on how to use big data hinders implementation, and few companies have realized impressive results from big data. According to Capgemini, only 27 percent of executives say their data initiatives have been successful.
Studies show that two-thirds of companies do not have a reliable method of measuring the success of their analytics. Still, corporate leaders continue to pour money into these programs. Nearly three out of four executives in a recent Gartner survey say their companies have already invested or plan to invest in big data in the coming years.
Making an Impact with Big Data: Five Lessons
We have identified five key actions CEOs must take to harness the potential of big data analytics:
Don’t abdicate the leadership role. Big data can be a major source of competitive advantage, faster growth, and enhanced operating and financial performance. However, leveraging big data often requires transforming well-worn business models. This kind of dramatic change can happen only if CEOs take the lead in setting business goals, focusing corporate resources, holding teams accountable for results, and celebrating success. As Deb Henretta notes, “At Procter & Gamble, we had buy-in from the CEO and CTO right from the start. They allocated significant resources, enabled us to create a ‘war-room’ filled with powerful computers and brilliant data scientists, and created a mandate to rebuild our operations.”
Find the “hot spots” for creating value from big data and make big bets. Winning with big data is about taking strategic actions, not just making strategic plans. It’s about identifying the key areas of the business where value is created and using big data and advanced analytics to accelerate growth, improve productivity, or reduce costs in those areas first. Focus on a few initiatives that will yield the biggest results in terms of overcoming inertia and generating momentum. Make your first play a win; put resources against it and concentrate on doing it well.
Redesign your structure to take advantage of big data across the organization. To unleash the real value of data analytics, leaders need to allocate resources, change processes, and build new ways of thinking into their organizations. This is a strategic, long-term move to bridge the gap between data strategy and execution. The promise of big data is not just insight, but faster decision making and action. Structure and organize your team to react faster to new information and insight. Note the example of Kroger, Inc., which uses data from its millions of Kroger Plus cardholders to personalize the customer experience. Kroger’s analytics team participates in every meeting and data thus drives decisions across the enterprise. The result of using customer analytics to predict demand has been significant growth from data-driven merchandising decisions.
Inspire a data-driven corporate culture. Leaders must encourage a shift in corporate culture to make transformative leaps inspired by big data. Often, big data initiatives are delegated to the IT team and treated as technical challenges rather than strategic opportunities. Consigned to data groups, these initiatives may suffer from lack of expertise, poor understanding of business needs, and a dearth of leadership. Particularly at large companies, decision-making often stalls in middle management, where risk aversion and a fear of failure pervade. As a leader, establish a culture in which people understand that smart failure leads to valuable learning and makes your proposition stronger and results better. Ensure that insights from data flow across your business units and inform decision-making by building cross-functional teams. Apple’s distinctive product and user interface design, for example, is the result of customer insight, engineering, manufacturing, marketing, and distribution. The connective thread is data-driven decisions throughout an entire process.
Rethink the way you measure and manage success. To transform legacy business models, it is usually necessary to adopt new performance metrics that can measure whether the organization is making progress in realizing the value of big data. Leaders should regularly review the impact of advanced analytics on the business’ key metrics. Use social and mobile technologies to create feedback loops with your teams, customers, and stakeholders. Use this data to measure the effectiveness of your efforts and to identify what’s getting in the way of your data transformation. Deb Henretta cites her experience at P&G: “Over time, the enterprise started seeing data as something that could help everyone to work faster and better. Big data began informing everything – from fast fixes for immediate problems to long-term strategic choices. Ingraining analytics into P&G Asia’s culture resulted in a transformation that drove top-line and bottom-line results for four consecutive years.”
CEOs have an opportunity to use big data and advanced analytics to change how their companies operate, compete, and serve customers. To succeed, CEOs must be personally accountable for driving the big data shift and working it into the company’s DNA. Only then will big data drive big results.
David Niles is president of SSA & Company and G100 Companies, and Chairman of the Advisory Board of the Deming Center for Quality and Competitiveness at Columbia Business School.
Deb Henretta is former group president, Global e-Business, at the Procter & Gamble Company and serves as a senior advisor to SSA & Company.
Sandy Ogg is the Founder of CEO.works; former Operating Partner, The Blackstone Group L.P.; and former CHRO, Unilever.
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