Data-Driven Companies Outperform Competitors Financially
Companies that rate themselves substantially ahead of their peers in their use of data are three times more likely to rate themselves as substantially ahead in financial performance, according to findings from the Economist Intelligence Unit.
Tue, March 19, 2013
CIO — Working with and making business decisions based on data is good for your company's bottom line. Companies that have embraced a data-driven culture—rating themselves substantially ahead of their peers in their use of data—are three times more likely to rate themselves as substantially ahead of their peers in financial performance, according to findings by the Economist Intelligence Unit in a survey sponsored by Tableau Software.
In October 2012, the Economist Intelligence Unit surveyed 530 senior executives from North America, Asia Pacific, Western Europe and Latin America across a broad range of industries. The survey found that the most successful companies have adopted a data-driven culture in which they maximize the use of data by providing necessary training and promoting the sharing of data across all levels of employees and departments.
"The importance of data-driven thinking is not new," says Jim Giles, author of the Economist Intelligence Unit report, Fostering a Data-Driven Culture. Many executives are familiar with the concept. The rise of data-driven companies, from Facebook to Walmart, shows how powerful the approach can be. But what does it mean in practice? And what are the benefits of adopting a data-driven culture within an organization?
Data-Driven Culture Is About More than Data Specialists
"Let us start with what a data-driven culture is not," Giles says "It is not a belief that data are an issue for someone else in the company, a job for a data specialist or perhaps the IT department. There is still a perception that a data specialist, perhaps a recent statistics graduate, should be parachuted into an organization to advise on how to work magic with data, much as a computer security expert would be called on to help shore up a company's IT networks."
This, Giles says, is flawed thinking. Instead, he says, forward-looking organizations don't concentrate data in the hands of an individual or small group but integrate data into their day-to-day operations.
"They are placing data at the heart of almost all important decisions," he says. "And they are tolerant of questioning—even dissent—about business decisions being made, as long as the questioning is based on data and their analysis. This is what it means to adopt a data-driven culture."
Top-Performing Companies Have Adopted a Data-Driven Culture
And the adoption of data-driven culture is bearing fruit for many organizations. The Economist Intelligence Unit found that only 11 percent of respondents felt their organizations make substantially better use of data than their peers. But more than one-third of that group was comprised of top-performing companies. On the flip side, of the 17 percent of executives that said their companies lagged peers in financial performance, none felt their organizations made better use of data than their peers.