Data is the new gold. Do your data assets reflect what is crucial to your strategy? Are you leveraging your data to grow the top and bottom lines?
Data is the New Gold
I frequently meet with business leaders from various size companies and across industries. We discuss business strategy, and they’ll describe opportunities and challenges.
Then, I ask them about their data. I get the blank stare. So, I explain how data is the new gold.
When I was CIO of a large publishing company, we had a unique algorithm to reduce duplicates in our subscriber lists, which increased the price we could charge marketers that purchased those lists. We ended up managing the list rental business for all our major competitors – at a profit margin over 90%.
When Jim Swanson, currently CIO for Johnson & Johnson, was at Monsanto, he convinced the rest of the leadership team to let him sell data to farmers. They generated a billion dollars of incremental revenue by helping farmers optimize the seeds they were buying.
As CIO and senior vice president for strategy management at a for-profit education company, we applied predictive analytics to determine which sales leads would become students in school – with greater than 97% accuracy, saving approximately $50 million a year.
I met with leaders of a small publishing company that used different vendors and, thus, different databases for each of their product lines, often with overlapping customers. I asked what value might be created by integrating those disparate databases into a single data warehouse. Their eyes lit up as they recognized the efficiencies to be gained, improved customer service, and potential new revenue opportunities.
Most companies don’t recognize the value of their data. And most under utilize their data.
Aligning Data Assets with Strategy
A data driven strategy is defined in terms of measurable goals that can be cascaded from the top to the bottom of the organization, as described in previous articles. It starts with contemplating how we delight our customers, describes new processes and process improvements to achieve those customer objectives, and aligns the organization. When we think of the organization, we consider people, skills, culture, tools, systems, and, yes, data.
Too many organizations forget about the data.
Every business in your industry probably has similar data. But each company uses some different systems and links their data in unique ways. Which means you each have differentiated opportunities to leverage your data.
Consider how you may be able to leverage your data to support your strategy. Does everyone in your company have access to the information they need to make the best-informed decisions? Or is the data trapped in outdated systems that make it difficult to access? Are you linking data across systems to provide new insights into your customers and market conditions? Are there strategic metrics that you wish you had but simply can’t unlock the data?
These opportunities may lead you to cost justify system upgrades, integrations, or the acquisition of data to marry with what you already have – all to produce actionable information, insight, or even predictability.
When you translate strategic objectives into actionable measures, do you sometimes back off because you don’t have the data to support the desired metrics? Or will you challenge your team to come up with the data? It may drive them to consider, and justify, system upgrades, system integrations, or changes in business processes that enable you to create the needed data.
And always consider the marketability of your data. We never want to sell customers’ personal information. Rather, what market insights can be created by aggregating and analyzing that data? Will those insights enable you to create new product or service lines? Is there a subscription business model that you can create? That’s a high margin business because you already own the data.
I worked with a company that hosted ERP systems for numerous clients. Of course, all those systems were appropriately separated and secured. I asked the CEO how much valuable business knowledge could be gained by analyzing data across that client base. Suddenly, there were new consulting opportunities. Let’ say the average Days Sales Outstanding (DSO) was 46 days across all clients in a given industry, and there was one client at 62 days, isn’t there an opportunity to help that lagging client?
Think about data strategically. Data is an asset, and you want to generate the highest possible return on your assets.
Remember, as board members, CEOs, or corporate executives, you don’t need to understand technology, but you better understand what technology can do for your business. Challenge your business and IT leaders. Ask tough questions about what you wish you could know regarding your customers and the business. You may be surprised by the opportunities they present.
And your strategy is incomplete without consideration of how to get the greatest return on your data assets.
We’ll wrap up this series on the Data Aware Strategy with a fun piece on how to leverage our data to accurately predict future business outcomes.
As always, if you are working on your strategy already, or just don’t want to wait for the complete set of articles, email Emily Ford at Emily@WolffStrategy.com and she’ll be happy to set up a free 30-minute consultation with me.
Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management, Digital Transformation, IT Leadership, and Executive Coaching. Larry has served as CEO, COO, CIO, Chief Digital Officer, and management consultant for public, private, international, and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues. His methodologies span industries and scale to companies of all sizes.
Feature image by phongphan from 123rf.com.
Copyright © 2021 Wolff Strategy Partners, LLC