Thursday, June 22, 2006

Why is it so difficult to execute a data strategy?

Jim Collins presented the keynote at IDC's forum last week. Jim is energetic and always has some great points. What struck me from his presentation was one quote. I don't have it exactly right, but he said something along the lines of, "Great companies have an unrelenting focus on the data." Data is important because it is turned into information which is used to optimize your company's operations and strategy.

I agree with Jim. Walmart has an unrelenting focus on data and is arguably a great company. However, the Walmart example is the exception and not the rule. Go into any leading strategy consulting company and ask the rank and file consultant what the bane of his/her existence is .... it's the lack of data at clients!

The focus, effort and budget necessary to collect good data are not immaterial. Below are the components necessary for a good, closed loop data strategy. Falling short on any of them torpedoes the whole effort:
  1. identify what data is important to decision making
  2. collect the important data
  3. analyze the data to produce information
  4. use this information in decision making
Even in a company that has the systems, process and headcount necessary to turn data into information, the biggest battle still exists - step 4 - getting executives to make decisions based on this data. Probably because of their experience, many senior executives trust gut more than analysis. In some cases they are probably right to do so, but a "pick and choose" data strategy can never be effective. A data strategy that is politicized will also fail.

It all comes down to leadership. Unless the CEO and leadership team are the ones pushing the unrelenting focus on the data, a data strategy probably isn't going to be a very successful effort. It can't be a bottoms up effort.

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