Dr. Thomas Erwin | 13 February 2019
In an era being shaped by global economic, political and technological challenges CEOs must confront many uncertainties as they map the future of their business. One trend is clear however — the growing importance of data in shaping critical business decisions. How they handle, manage and utilize that data will, to a great degree, define their own success as they navigate their digital journeys.
Every CEO needs to think very hard about where their business fits into the new data ecosystem.
At present many CEOs understand in principle the value and potential that data offers yet seem reticent to fully trust (and act on) what the data tells them. KPMG International’s recent Guardians of Trust study highlighted the extent of this conflict — just 35 percent of executives surveyed said they had a high level of trust in their own organization’s use of data analytics while 25 percent admitted they either have limited levels of trust in, or actively distrust, the data they receive.1 It’s probably not a surprise, then, that in our CEO Survey, 67 percent of CEOs say they have ignored the insights provided by data analysis or computer-driven models in the last 3 years, because they have contradicted their own intuition or experience.2
This sense of suspicion risks hurting good decision-making. How then can CEOs develop the type of data-driven strategy that will inspire the trust of their colleagues, customers and, indeed, themselves? We believe these five leadership lessons can help.
1. Stay business focused
Too often companies obsess about technology without weighing up the business case for embracing it. CEOs and other executives often appear confused by the concept of how a data-driven strategy can transform a business. To overcome that confusion they should ask this key question — what is the business problem we want data to solve? Once that is determined executives can set business-relevant key performance indicators (KPIs). For example, is the data strategy helping growth? Reducing costs? Mitigating risks? This way, executives can demystify data by making it no different from the normal problemsolving strategies that they need to apply.
2. Create a data-led culture
Many times CEOs approach data purely from a business strategy point of view but it’s impossible to implement a successful strategy if company culture hasn’t already embraced the idea of being data-driven. That type of culture needs to be increasingly collaborative and interactive. And it has to be company wide so it can break down traditional silos that encourage the hoarding, rather than free flow, of data. To help nurture this culture companies need to think big but start small. In doing so they can convince all the organization how data will help their work.
3. Have confidence in using data insight to create value
For CEOs who prefer to trust their own instincts, making decisions based on data rather than their gut might at first feel uncomfortable and counterintuitive — especially when the insights are being provided by an algorithm, not a human.
Validation of a data-driven approach will be crucial in applying algorithmic insights to create real business value. However, given that CEOs will likely remain responsible for the actions or decisions even if taken by a machine, they will have to have confidence in the insight they receive even if they don’t fully understand how the algorithm works.
Building a framework of checks and balances to ensure trust in the data is crucial. That involves making sure algorithms aren’t relying on biased information and that diligent quality control measures are in place. In this way CEOs can be comfortable basing actions and decisions on data insights even if they don’t understand how an algorithm works because they trust the quality of those models.
4. Know what you do well and when to collaborate
Every CEO needs to think very hard about where their business fits into the new data ecosystem. With the biggest tech companies spending billions on data infrastructure and young data-driven start-ups innovating faster than any established business can hope to match, leaders need to evaluate where they want to compete and where they really have a differentiating part of their business model. Simply put, how safe is your business in this data age?
For many, the path to success will not involve going it alone but instead forming partnerships with those companies that are leading in data-driven technology and can complement their offering. As data reshapes every industry sector no company (regardless of their current size and authority) can afford to go it alone. Neither is this a one-time decision. CEOs will want to review their current value chain on an ongoing basis to evaluate how data analytics, intelligent automation and AI can help them stay relevant and competitive.
5. Time for CEOs to lead from the front
Even when CEOs do grasp the importance of integrating a data culture throughout the organization they sometimes don’t think they have the authority in the subject to convince others. Because they lack expertise they look to delegate — putting responsibility for building a data-driven culture in the hands of other executives. Yet in distancing themselves they may be sending a message to other parts of the business that it’s not their concern either. That can undercut the work of the executives they have delegated to — leaving them unable to convince others to share all the data they have that is needed to be pooled in order to truly guide the organizations. Even today, many organizations still struggle to build a successful data-driven operation not because of technical reasons but because of internal politics.