This is the first article in a 2-part series!!
Few would argue against the importance of data in today’s highly competitive corporate world. The techniques used to transform this data into actionable insights are crucial to the performance of an organisation. A study carried out by McKinsey & Company reported that companies that lean on their customer analytics are 23 times more likely to outperform competitors in acquiring new users and 19 times more likely to achieve above-average profitability than their non-data-driven competitors.
However, the reality is that data is worth very little if you don’t have highly skilled professionals who can derive actionable insights from it. Knowledge is what drives business value, and data science is the process through which this knowledge is created. Being able to harness the power of data science is thus extremely valuable.
The problem is that the advantages that could be captured by having an effective data team in place remain elusive to many organisations around the world, meaning that these businesses will continue to amass large amounts of data with no fundamental understanding of how to use it.
The reality is that data science is about giving data a purpose — and this is the job of your data team.
The prevailing missions of any data team is to 1) create insights from data and 2) communicate those insights to the relevant stakeholders across the business. Within these united missions exist three basic functions that are fulfilled:
Now that we know the business goals and functions of the data team, it’s time to consider the value they can bring to the organisation. Below are just some of the many different ways data science can provide actionable business value.
By generating otherwise hidden insights from a company’s data, the data team can guide non-technical business agents across the organisation, in different departments, to make better-informed decisions, thus optimising potential outcomes.
The data team can guide the upper management levels and the C-level executive team with their analytics to help devise business strategy in critical divisions, including the revenue drivers — marketing and sales — to ultimately improve all business operations and increase profitability.
An effective data team shows everyone how data can be leveraged to generate actionable insights. By doing so they 1) encourage all teams to contribute to greater business value by making more data-informed business decisions, and 2) help the upper echelons of the organisation better understand and appreciate the advantages of data science & and its wide-scale adoption.
Companies are constantly experimenting with company data and creating models using this data that simulate a variety of potential actions to show which path is expected to bring the best business outcomes.
They can also test the decisions made based on these models to see how they have effected business operations, to measure key metrics that are related to important changes and quantify their success.
The job of the data team requires them to continuously and constantly improve the value that is derived from the organisation’s data. They are continuously looking for new opportunities for improvement and developing new methods of analysis, making it possible to discover new revenue streams.
No longer do businesses need to take risks or make uneducated guesses about what will work. Instead, they can make decisions based on quantifiable, reliable data insights. Data science allows you to understand business operations on a whole another level.
From modelling the business cost of retention to analysing workforce turnover, to evaluating management and overhead expenses, data teams can help their companies identify cost-saving opportunities that can potentially improve business functions & increase profitability.
A fundamental goal of a firm is to develop and maintain a competitive advantage in the market. But how are these advantages created and maintained in dynamic competitive environments? By identifying (and seizing upon) these market opportunities and outmanoeuvring perceived threats.
All of the answers to unlocking this ability lie in company and market data that, when analysed, allows you to garner insights that drive business value, thus marginalising competitors.
This brings us to the crux of the discussion — whether or not companies are really leveraging these different types of value created by data teams to help achieve business goals, identify new opportunities & stay ahead of the curve.
To answer this question, one must consider the crucial difference between value creation and value extraction. Any business can employ an effective data team with all the required positions filled by domain experts. And this team can be ingesting, processing, and analysing terabytes of data to generate and report on new & exciting insights (value creation).
But if these insights are not being effectively communicated to the right audiences around the organisation & thus are not being applied by the various business agents (value extraction), then what is the point in the first place?
How to truly leverage the value created by your data team will be the focus of our next article — stay tuned!