McKinsey Global Institute Study shows organisations that harness Big Data and Analytics are …
- 23 times more likely to acquire customers
- 9 times more likely to retain customers, and
- 19 times more likely to be profitable
But a few years ago, Gartner estimated that 60 per cent of big data projects fail. As bad as that sounds, according to Gartner analyst Nick Heudecker Gartner was “too conservative” with its 60 per cent estimate. The real failure rate? “Closer to 85 per cent.”
Since then, the tweet Heudecker sent has been deleted. This is a hard truth that illustrates the problem isn’t the technology, it is you!
Leadership troubles
It is true but very upsetting to know that the biggest failure in this Big Data implementation is that the C-suite underestimates their involvement to carve out the problem statement.
The key decision-makers in the C-suites should sit and discuss the primary pain the company is facing. They will need to work on a few that would make the biggest impact.
These issues are usually left to the Chief Data Scientist (CDS) (who is usually a very intelligent geek) or the Chief Data Officer (CDO) (again – who is a very smart person that knows how to manage the company’s overall data governance and sees the big picture for data priorities and strategy).
I remember having a conversation with an ex-Chief Financial Officer (CFO) of a multi-billion Dollar company, who suggested that we should churn out more business-minded Data Scientists.
I believe that we are looking at this all wrong. If a Data Scientist can address the business problem and the business strategy, the work of the Chief Executive Officer (CEO), Chief Marketing Officer (CMO) and CFO would become irrelevant.
This statement can anger the C-suite. It is hurtful but it is important to remind the management that strategy starts from top-bottom.
When this is left to the Data Science group and the line managers or individual departments, you are then left with 200-300 Big Data projects which I predict more than half will fail. After all, failing to establish order and governance over big data projects leads to chaos and poor business decisions and places businesses at a severe disadvantage in today’s data-driven world.
Harvard Business Review indicates that a data strategy helps organisations “clarify the primary purpose of their data and guides them in strategic data management.” Astoundingly according to McKinsey, only 30 per cent of banks have a data strategy.
Deciding to become data-driven can be a long, difficult process that once decided can spur a rush to try to attract data specialists and make scientific inferences before knowing the real problem. That may not seem like a problem because after all, we need data and these specialists know how to handle it.
Poor communication
‘Communications’ are often still taken for granted by management as something that just ‘happens’ through emails, WhatsApp messages, calls or spreadsheets. However, without a well-defined communication strategy, many companies are facing money wastage with every project they attempt to execute.
Poor communication is the primary contributor to project failure one-third of the times and can have a negative impact on project success more than half the time. Once the C-suite has identified crucial strategic initiatives, they must communicate these initiatives down to the line managers.
Now, it is extremely important not to pass it down without equipping these managers with relevant technology and talent. Being in this vulnerable state can lead to ambiguity, noise, and complexity, especially if teams aren’t ready to discover, interpret and use the data in decision-making.
Everybody says critical thinking is a must-have skill but never has this been more true than when it comes to investigating insights. Don’t purely and blindly take data as fact without ensuring its accuracy or assessing the potential impact this data-driven decision could have on your company.
The tricky part is getting them to identify, store, collect (if needed) and run analysis on the data. This brings us to the next topic.
Lack of skills
Based on my observations and several conversations with other industry leaders, I believe that the lack of skills in organisations contributes to 30 per cent of the failure. This affects or takes effect on several levels:
- C-suite not having the digital leadership mindset to drive strategy
- Line managers not understanding the data they have within them
- Rest of the company, not understanding the lingo of analytics
The danger lies in there not being a culture that normalises embedding analytics in their daily work. Usually, this would be 80 per cent of the company population. No initiative from above can be driven because the rest of the organisation is still stuck in the past and everything that is being spoken would either be perceived as ‘back to the future’, therefore perpetuating resistance to change.
Unfortunately, dataphobes are likely to squander promising business opportunities and often fail to see problems until these problems become full-blown crises. As we know, it is human nature to fear what we don’t understand. Most people, let alone companies, are not prepared to adopt radical changes and to become data-driven.
The challenge lies in ensuring big data projects perform reliably and efficiently enough so that organisations can flip their mindsets from considering big data as only a defensive tool for current activities to using it as a catalyst for business growth.
Ambitious intentions
Nearly all companies that embark on data-driven organisation or digital transformation initiatives are too ambitious. They either spend millions of ringgit on infrastructure or claim a framework for analytic or digital transformation that might not be wholly sustainable or stable. Having observed this for years, it is clear that this has to be tackled from above and below.
The C-suite may try to achieve sweeping change throughout the company to go data-driven—which can lead to counterproductive and overreaching. Organisations are expected to give a quick ROI because of the investment made.
The issue here is that the investment can be made with a lot of assumptions. The reality is the investment was made based on how traditional businesses would do it. They will tender and buy equipment then assume that with a click of a button, it would solve the company issues. I usually say that the selling point is that – press that button and it would solve world hunger.
Data is based on reality by examining what is actually happening. Therefore, decisions should be grounded in facts as much and as often as possible.
Emerging victorious in this landscape of digital transformation will not be made by making huge bets. Winners of the digital age will be agile, pragmatic and disciplined. They will follow a carefully devised transformation roadmap to optimise performance in the functions and operations that create the most value while building the technical proficiency and resources to sustain the transformation.
Scope for hope
60 per cent or 85 per cent is a big number and cannot be brushed aside. But this could be rescued by having some simple but hard measures put in place.
People from the top must define clear problem statements. They need to have a data-driven session to thrash out the strategy and priorities. From there, the C-suite has to parallelly initiate the whole organisation to be data ready. This would be a top-down approach whereby the journey will allow you to meet in the middle, thereby allowing quick wins and long-term initiatives to be driven clearly.
Another important thing is that, based on the maturity of the industry, companies could strategise on if they need to quickly build their used cases or have a team whether internal or external to operate on the problem statement so that they can hit the ground running. This helps to get the buy-in from the management quicker.
Always built a talent strategy around whatever problem statement is produced to ensure there is an opportunity to inherit the solution. Companies can then take it and run it on their own.
Source: e27
