"Right now, the biggest challenge for organizations working on their data strategy might not have to do with technology at all." - Harvard Business Review
While the benefits of data-intelligence (i.e., combining data from a company’s software systems to automate reports and dashboards) are widely endorsed in private equity, the lack of adoption has been confounding, with only 26.5% of organizations reporting having established a data-driven organization (Bean, 2022).
Why is the shift to data-driven so difficult?
The answer seems to be cultural, with nearly 92% of NewVantage's 2022 Partner survey respondents citing company culture as their main barrier to adoption. Over the course of 10 years, we've encountered that very issue in virtually every one of the 200+ clients we've worked with. And we've learned ways to overcome it.
"...becoming data-driven is about the ability of people and organizations to adapt to change."
Becoming data-driven requires thoughtful planning, and the author recommends these three driving principles:
- Think different.
- Fail fast, learn faster.
- Focus on the long-term
Blue Margin's take on these principles:
- Avoid biased decisions and navigate your business with dashboards. A good dashboard makes it easy to identify where and why the business is underperforming, and how to increase profits.
- Iteration must be part of your data initiative. Use data intelligence to identify points of constraint in your operations and iterate often on your processes (and dashboards) to unblock issues for increased efficiency and productivity.
- Develop a Data Roadmap, but don't mistake data projects to be as time and labor intensive as an ERP implementation. (Listen to our podcast on the topic.) Look for quick wins, and with a land-and-expand approach, you can quickly fix acute issues by simply increasing visibility. After a few project sprints, you'll be able to give every employee easy access to the metrics that keep everyone focused on profitability.
Culturally, dashboards help people take ownership of their responsibilities, and we've seen effective data strategies with our clients lead results as significant as a 7% increase in profitability and a 50% decrease in turnover. (Read our Almo and CoolSys case studies for details.)
Has your team found success in adopting a data-driven approach? If you’re part of the 92% still working to adopt a data-driven model, we'd be glad to connect sometime to talk strategy.
About Blue Margin
Blue Margin helps private equity and mid-market companies quickly convert data into automated dashboards, the most efficient way to create company-wide accountability to the growth plan. We call it The Dashboard Effect, the title of our book and podcast. Our mission is to deliver breakthroughs early and often - within your timeline and budget.
Bean, Randy (2022, Feb 24). Why Becoming a Data-Driven Organization is So Hard. Harvard Business Review. https://hbr.org/2022/02/why-becoming-a-data-driven-organization-is-so-hard?