Data Culture – How to transform your company in 7 steps

How do you take your business to the next level? Answer: by establishing a corporate culture in which decisions are made on the basis of data. We explain how to do this, what pitfalls to watch out for, and how to sustainably establish a data culture for the long run.

On the ascent from data vacuum to the data Olympus, your company will go through five stages:

1. In the beginning, there was the data desert. You don't really know what this data culture is supposed to do, and you prefer to decide from the gut. Went alright, so far, didn't it? We call this stage data ignorance.
2. One lucky day, you stumble upon this blog article. Something caught your eye and aroused interest. Awareness of data culture is emerging. Take a deep breath now, you're company is about to take off!
3. Highly motivated, you build dashboards and tinker with your KPIs. Your company is now in the phase of adopting a data culture.
4. Suddenly, your employees begin to be interested in data. They regularly bring charts and tables to meetings. Bravo, you have reached the level of data maturity.
5. Your company is featured in this blog, and your highly intelligent statements are regularly cited as a good example of lived data leadership. You are now officially a thought leader in data culture. Keep it up, the sky is the limit!

But why the trouble? What good is it for me to invest in a lived data culture?

This is what we believe at Power Partners: The times are long gone when you could gain a competitive advantage with a little data competence. Today, it is difficult to keep up without data-driven decision-making. And tomorrow, companies without a lived data culture will perish. Pinkie promise. No matter what industry you are in. No matter if you have a B2B or B2C business. No matter if you are breeding a newly hatched startup, or if your business has been active for decades.

Simply put: Data culture increases the value of your business.

Or the other way around: A lack of data culture destroys the value of your company.

Hand on heart: Where do you stand with your company? Are you a data thought leader or a data buffoon?

You don't know? Find out with our (not quite serious) data maturity survey.

Data Survey

Disappointed? You are not the only one. In fact, only 54% of all companies in Germany regularly use data in meetings. And only 23% use data whenever central decisions are due. As reported in a recent study by IDC.

But enough played. Let's get serious. Let's dig more into this mysterious thing called data culture. What is it? How exactly does it help to increase the value of the company? And how can you, dear entrepreneur, establish a better data culture in your company, so to heroically climb the steps - one by one - to the data Olympus?

Data Culture: Definition

Think of data culture as something you and your employees do on a daily basis. The following key questions will get you on track:

Do you train yourself and your employees so that everyone is more competent in dealing with data?

Do you and your employees have access to the relevant data?

Do you base all important decisions (investments, bonus, personnel selection) on the basis of data?

When contracting a service provider - for example, a social media marketing agency - do you define measurable goals and make the success of the project dependent on the achievement of these goals?

As an organization, do you set quantifiable goals and measure them on the basis of KPIs, e.g. with OKRs?

Do you praise and promote staff who back their proposals with solid data, for example in meetings?

Do you have a technical platform such as a data warehouse or a BI solution that enables or facilitates the use of business data?

Yes?

Yes, yes, yes!

Congratulations, you have an excellent data culture. Off on holiday! It's best to do a week of data detox.

No?

Tough luck. It's detention time. Read on.

Data culture: What's in it for me?

80% of companies say they provide excellent customer support. 8% of the customers of these companies confirm this.

Study by Bain & Company "Closing the Delivery Gap", 2005

There are dozens of reasons why the age of the data-driven enterprise has dawned, and why you should be part of it. The following are obvious and undisputed.

• Data is a fantastic basis for discussion. Data makes it possible to question statements and assumptions and to unmask ready-made ideas.
• Even the most experienced boss is not protected from falling victim to cognitive biases: belief bias, confirmation bias, etc. (see list of cognitive biases). Data culture helps to recognize these blind spots.
• A data culture is a decision-making culture. Make better informed decisions. Decide faster.
• Early detection: Recognize changes in the market before they are reflected in your (backward-looking) yearly financial statements.
• Empower your employees to act and decide independently - because everyone knows what is important and how to contribute to the goals of the organization.

7 Steps to a Better Data Culture

When it comes to sustainably improve the data culture, the following steps have emerged as extremely expedient.

So, here they are, the 7 steps that kickstart a better data culture:

1. Identification: Find the business area that could benefit most from a lived data culture. This can - but does not have to - be finance and accounting. Often it is marketing, HR, production or project organization, because these areas are closer and more understandable to many employees.
2. Definition: Define the most important KPIs for the identified focus area (maximum 4, better are one or two KPIs). Set the benchmark - what is a good value, what is a bad value?
3. Goal: Set a clear goal for yourself and your company. By when do you want to achieve which value? Communicate this goal to the entire workforce. Also set a reward. A goodie that you'll grant when the goal is achieved. The goal should definitely be written down. Remember: Commitment reinforces the lighthouse character of your endeavor!
4. Exposure: Develop a dashboard that shows the KPIs in an overview. Give all employees access to this KPI. Or even better: Put the KPI in onto a smart TV where everybody can see it.
5. Development: Invest into a report that shows the historical development of the KPIs. Like this, everyone can see and find out where your company stands today, and where you come from. The usual grizzling like "Nothing ever changes in this mess shop!", "Everything is getting worse and worse!", "That doesn't help!" are nipped in the bud - or in the throat.
6. Exploration: Develop a report that allows drilling down into the components of each KPI. As a result, everyone understands what the cause of a positive or negative development is. Such a report better be interactive, so that employees can discover the relationships themselves and - by exploring the data - they start to intuitively understand the complex inter-dependencies.
7. Education: Huddle around the dashboard screen. Explain what you do and why. Organize a training session, so everyone understands what the KPI and the underlying data means. Train your employees on the BI tool you use.

Kickstart the transformation to a data-driven enterprise

Admittedly, these measures do not immediately make the entire workforce a candidate for a doctorate in data science. It's not necessary either! This step-by-step approach is so successful because of its signal effect: The employees realize that a new era has dawned. They understand that, from now on, decisions will be made on the basis of measurable data. And they know exactly what is important to you, the visionary of your company.

But this playbook wouldn't be complete without a word of warning. You should definitely consider the following points:

1. Don't set yourself too high goals, that can be demotivating - both to you and to the team.
2. Be careful with rewards. At least in the beginning, you should definitely not pay out monetary rewards. If the KPI is poorly defined, or if the goal is set too high, your entire team will be demotivated. You should also refrain from individual rewards. Team rewards such as a fun trip, a new coffee machine, etc. work much better.
3. The exact definition of the KPIs is of the utmost importance. This requires experience and a sense of proportion. In case of doubt, it is better to consult a specialist, or you can pick the brain of friendly entrepreneurs to get a feeling for what works and what does not.
4. Invest in technology: With a poppy Excel that's buried somewhere deep in a server's data structure, you won't impress your employees. Your workforce needs to see that you're serious. And that includes a modern, interactive dashboard with good design and user experience (UX) as well as automatic data updates.