Is your Organization truly data-driven?
Many organizations think that simply because they have a lot of data, generate a lot of reports and use fancy dashboards, they are data-driven. However, to be truly data- driven, you need prescriptive analytics, seriously consider these findings and act upon them.
Signs that your organization is not data-driven
Having big data or a team of unicorn data scientists, does not immediately make an organization data-driven. It requires establishing an effective and deeply ingrained data-driven mindset.
It is often the last step in the process of extracting value from data, the decision-making itself, that is least discussed. You can have skilled analysts who generate masterful reports and present carefully crafted insights and recommendations. However, if that report sits on a desk, or unopened in an inbox, then it is all for nothing.
Culture too, is key. It is important for your organization to go against the so-called HiPPO-culture (Source: Agile & Entrepreneurship Best Articles). This is a culture where the Highest Paid Person’s Opinion (HiPPO) influences all decisions. The danger exists that the HiPPO has already made up his mind what action he’s going to take, regardless of what the data shows. An organization with such a culture will never be data-driven.
Setup for failure
There are several types of activities that data-driven organizations engage in. These activities help them complete the full analytics value chain. It requires that the right data is collected, the analysis is properly conducted, the insights are considered, and that these insights drive concrete actions. Furthermore, acceptance among employees and their trust in data is needed to change from a HiPPO-culture to a culture that trusts data.
The culture in a data-driven organization should be one of continuous improvement. Everyone strives to be able to make better decisions every day, they won’t let the HiPPO-culture take over. An organization with such a culture is continuously testing different scenarios using A/B-tests to determine the best course of action. Finally, they choose among future options or actions using a suite of weighted variables, often obtained from (predictive) analytics on the data.
ING Asset Based Finance strives to be such a data-driven organization. By talking to everyone – from higher management to employees – about the possibilities of data, they strive to make the organization data-driven. Using a three-phase process – from proof of concept, to pilot, to production – it is possible to show the added value of data-driven solutions to the business.
Being data-driven is a spectrum: it is not binary – you can always become more data-driven
Becoming data-driven, step by step
Being data-driven is a spectrum: it is not a binary – you can always be more data-driven. It is possible to always have a better decision-making process. Do not expect to become data-driven overnight, it is neither easy nor quick. Your organization will only be data-driven when everyone contributes significantly.
The first step is to ask: “How do I make decisions?”. Are you the HiPPO, or do you trust data? Do you follow your gut feeling, or take all data into account? The next step is to ask: “How does the organization make decisions?” Only when everyone in the organization trusts the power of data-driven decisions, you’re ready for the next step – act upon all the derived insights. Your organization must become truly data-driven. It doesn’t have to be today, or tomorrow, but it is a prerequisite for a futureproof organization.
It is difficult to become a data-driven organization by yourself. This is why ING Asset Based Finance tries to help their customers become more data-driven as well and is regularly piloting new services. They always strive to use the newest technologies and developments in data analytics, machine learning and AI. For example, they provide a tool for their clients that uses AI to predict changes in their working capital. Both parties – ING and the client – are notified in changes with respect to the payment behavior of their debtors. This not only informs them, it enables them to take action on these debtors. A win-win situation, where both parties become more data-driven.
Are you interested in this topic and like to learn more on how to become a data-driven organization and work more effectively with data? Then sign up for the meetup ‘Advancing with AI for Financial Institutions’ that ING, SAS and Finaps will organize on October 9th. Be inspired on how to work more effectively with your data and to adapt AI on a daily basis leading to a futureproof organization.