How to build and lead a data-driven organization—and why it matters

Technology, it turns out, isn’t the biggest obstacle to becoming a data-driven organization. Nine in 10 executives say cultural impediments remain the greatest barriers to becoming data-driven, according to a 2022 survey by NewVantage Partners.

What should CIOs and IT decision makers do to lead their organizations forward? 

To answer that question, we interviewed Shelley Leibowitz, former CIO of the World Bank and Morgan Stanley, and a prominent technology advisor and board director who recently joined Elastic’s Board of Directors. Following are highlights of the conversation.

What sets apart data-driven companies? 

Data-driven companies have an agility that other companies don’t have. It is an awareness, an ability to understand and have intelligence into the key drivers, risks, and dependencies of the business in a timely way. We have all seen firsthand the changes that can happen in the macro environment that require insight, knowledge, and actionable information. 

That information has to be accessible and available to the groups that need and can act upon it. Organizational silos will only be a roadblock, because those silos are not what your customers see, they are not what your partners see, they are not what your suppliers see.

Resiliency has become the catchphrase of the day. Complete, timely, and relevant information allows organizations to be both resilient and responsive to changing needs. There is a line I think is terrific, which is, ‘Don’t ship your org chart.’ What that means is don’t embed your organizational constructs, your silos, into your product and services. Your customers don’t care about your internal walls.

How do you address the cultural and organizational challenges to big data initiatives?  

These battles are usually won and lost in middle management. Senior executives typically have the vision and strategy, which is why they are in the seats they’re in. Employees on the front lines and those earlier in their careers tend to embrace change and modernization.

Middle managers are the ones who are often most affected by changes, whether it’s organizationally, or in terms of incentives, or based on new and changing skill sets. It is incredibly important to align the goals, incentives, and capabilities at all levels of the organization to be truly effective in big data transformation initiatives. 

What are some changes that are required to build a successful data-driven organization? 

It is a cultural shift and an organizational shift. And often, it’s not easy and not self-evident. It requires outside-in thinking, not inside-out. You need to start with the perspective of what are your business goals, and how are you looking to achieve those goals. What kinds of information are helpful? And to whom? 

Putting in place the organizational and technology building blocks for a successful data-driven organization is a multiyear process. Evidence has shown that the more broadly you define the transformation, the greater the potential impact, but this requires more planning and discipline and an ability to learn as you go and to self-correct.

Certainly, cloud and SAAS services go a long way in helping to facilitate the technology transition, and ultimately the business impact. 

Where would it be important to show impact along the journey?

You really need to start with the customer experience, from cradle to grave. How do you need to interact with your customer? 

One of the best articles on data I’ve ever read was in Harvard Business Review, “Artificial Intelligence for the Real World.” It talked about three phases of maturity. The first phase is about process automation, which is about using data to drive efficiency (such as using AI to capture actionable insights from emails and customer-service calls).

The second is what the article calls “cognitive insight,” which is about using data to build up your knowledge of customer needs, wants, behaviors, and characteristics (such as the ability to predict what they might like to buy). The final phase that’s discussed is “cognitive engagement,” where you’re leveraging data to actually improve how you interact with customers, for example, how you personalize your service to recommend products in an engaging way.

What metrics should CIOs think about, in order to show progress and benefits during the journey, to win buy-in for continued investment in the transition?

Every company is different, so it’s hard to come up with a common set of metrics. But don’t try to focus on too many metrics to start. Find the dozen or so that are the most important indicators of the success of your journey. Figure out the important indicators and build your plans and incentives around those.  

What are the risks of not having a data-driven organization in today’s world?

You won’t be able to compete over time. In every arena, customers have a lot of choices, and they are smart. Most of us don’t just have one bank account, for example. If you experience friction with a business, you certainly won’t give them more business.  

So how will you know you’re on the right path to become truly data-driven?

You know you are successful when you delight your customers with products and services that they continue to demand over time. A successful business is a sustainable business. And a growing business. 

You know you are successful when the information you have available surprises you with insights that aren’t obvious. That you wouldn’t have had otherwise. And that you didn’t have in the past. When those insights are actionable and productive, then you are achieving excellence.