We live in an unpredictable and volatile world where the past does not define the future; knowledge is growing exponentially; the window of opportunity is shrinking; the tolerance and the margin for error are diminishing; barriers across borders are vanishing, and the world is becoming one global village. The way organisations were led and managed in the past, especially key decisions made based on gut feel, definitely may not be the most sustainable means to continue with these changing dynamics. It’s become an imperative whilst acknowledging that experience and acumen garnered over years has value, where necessary those must either get validated or complemented by data and insights for lasting and sustainable impact.
Ramesh Shanmuganathan, the Chief Executive of JKIT and the Executive Vice President and CIO at John Keells Holdings (JKH), Sri Lanka’s largest company, has been helping organisations devise and implement data strategies in several industries. In an interview, he discussed where companies keen to implement a data strategy should start, and what makes for a successful strategy.
Most companies drive their organisation on gut rather than leverage the data they possess. Is this the right strategy given where we are today?
Many today drive their organisations based on leadership acumen from their experience as well as limited historical data augmented, sometimes, with external consultancy for specifics related to a subject, strategic investment or initiative or more broadly for reviewing a company’s strategies, portfolios or business model. This is a well-entrenched practice. The shift to data is as much as cultural as it is technological and needs sponsorship and alignment from the board downwards and a focused transformation strategy.
The world is getting democratised by the day and this requires decision making to become decentralised with people, who are closer to the action empowered to ensure that the organisation stays responsive. This need has got further amplified after the Covid19 pandemic. All of this challenges the conventional wisdom of ‘gut’ decisions of a few who are experienced and at the top of the hierarchy. This doesn’t stack well for today’s digital organisations where we wish to democratise and empower the constituents for greater agility.
We definitely need to rethink the way we operate, make decisions and create value.
What, in your opinion, will drive wider adoption of data-driven strategies in organisations?
The speed of change around us would have been unfathomable. The pandemic has accelerated change. Companies who are able to respond swiftly will survive, become resilient and will remodel their way to capitalise on emerging opportunities while mitigating threats in a structured and systematic manner.
This fundamentally reinforces the chaos theory itself which expands on the science of surprises, of the nonlinear and the unpredictable. It teaches us to expect the unexpected. These phenomena are often described by fractal mathematics, capturing the infinite complexity of nature. Recognising the chaotic, fractal nature of our world can give us new insight, power, and wisdom. By understanding that our ecosystems, our social systems, and our economic systems are interconnected, we can hope to avoid actions that may end up being detrimental to our long-term well-being.
We need to acknowledge the world we were living in a decade ago and today are indeed very different. We now face new threats with extreme natural disasters, market volatility, pandemics and social upheavals more frequently. The conventional wisdom which has helped us manage in the past is of limited use, now. This necessitates that leadership in organisations acknowledge the same and drive step-change to leverage data to create and drive value.
How should organisations ready themselves for the future? What are the major shifts that you would recommend that they need to embrace in transforming themselves?
Most organisations today are in their comfort zones and are not challenging themselves enough to make themselves relevant for today’s context. What we do is very transactional and that’s been driven by our assumptions and past experiences of customer sentiment. The pandemic is challenging these assumptions and forcing organisations to revalidate them. We are seeing a major shift of power from the core of organisations to its constituents at the edge – be they customers, employees, suppliers or partners due to the increasing level of adaption of digitalisation.
Most organisations today are built for yesterday’s world and the pandemic just went on to reaffirm that fact. Their structures are too complicated, hierarchical, siloed in their thinking, bureaucratic, with centralised control, poor delegation and lacking empowerment for constituents at the edge to make decisions to fulfil the organisation’s mandate. The era of standardisation and predictability is long gone.
Today, organisations should be ushering in an era where our customers are centre stage and we need to reimagine, reinvent, remodel and reorchestrate ourselves and our value ecosystem to be relevant in delivering and sustaining value. We need not own the entire value chain, but be able to dynamically assemble or disassemble the value chain as and when required to be stay relevant. This shift is becoming a key imperative for organisations due to the following key trends we observe.
Increased degree of connectedness:
- More people are getting connected and the degree of separation between any two individuals in the world is narrowing.
- This provides an opportunity for any organisation to reach people beyond their physical reach.
- This also puts more choices in the hands of constituents – be it a customer, an employee, a supplier, or a partner.
- Increasing quantum of data that can be used to create and/or enhance value.
Need to manage economic value:
- The shift to being able to manage financial costs to economic value. Most still manage costs rather than value.
- Successful organisations have shifted from the notion of cost centres to value centres. This is due to the concept of the linear value chain where any activity or unit not contributing directly to the value chain is viewed at a cost centre.
- Most still analyse structured data which are mostly historical and/or financial in nature which fails to provide insights to create future value.
- Acknowledge that the capacity to create economic value mostly is in our balance sheet and not in the profit & loss statement because it’s mostly intangible. Today, organisations are struggling to justify and report on these to their senior leadership and boards.
Opportunity to create sustainable value:
- Today the opportunity is beyond what you see in the traditional brick-and-mortar world and more successful businesses are waking up to that possibility.
- Sustainable value can only be created by understanding the constituents of the value ecosystem and leveraging their core competencies.
- To create and sustain value they should have the ability to measure the value being created and enhance it with the passage of time on a continuous basis.
- Structured data alone is not sufficient to create and sustain value. It needs to be augmented with unstructured data as relevant and that needs a well thought out data strategy.
How does an organisation go about establishing a data strategy? What are the key considerations?
Today, data is a strategic asset. Organisations need to discover a way to extract value from their data. Data is no longer a byproduct of doing business – it’s a critical asset that enables processing and decision making. A data strategy helps by ensuring that data is managed and handled as an asset. It provides a common set of goals and objectives across the organisation to ensure data is used effectively and efficiently. A data strategy establishes common methods, practices and processes to manage, manipulate and share data across and beyond an organisation.
It’s important to then appreciate that for anything to create value, the created value must outweigh the investments either in the short, medium or long term.
Value created by data = Potential value of data – TCO of data – Risk of data
In order to maximise the “Value created by data”, we need to ensure there is a very clear alignment between the business strategy and the data strategy and there is leadership commitment to drive this. A data strategy can be either defensive, offensive or both based on the business mandate. Based on the potential value, costs and risk will vary.
The data strategy is key to identify focused, tangible goals within each individual business discipline and/or use case. Every organisation has a unique combination of skills and a different set of strengths and weaknesses to address in the data strategy by identifying the strengths and weaknesses in each of the following areas. A great starting point is to look at the data strategy framework which at the minimum should address the following areas:
- Identify executive sponsors and key stakeholders
- Envision the future with data
- Reimagine your data and the data supply chain
- Build a 360 view of your data across domains
- Create a future-proof data and technology architecture
- Invest in an enabling data and technology platform
- Govern and manage data holistically for its value, cost and risk
- Build a cross-functional team to drive value with the right structure and staffing
- Institutionalise governance structure for the program management
- Periodic review and recommendations to fine-tune.
Further, one needs to address these in their data strategy by focusing on the following five aspects with respect to data:
- Identify – Identify data and understand its meaning regardless of structure, origin or location
- Store – Persist data in a structure and location that supports easy, shared access and processing
- Provision – Package data so it can be reused and shared, with rules and access guidelines
- Process – Combine data from disparate systems, and provide a unified, consistent data view
- Govern – Establish, communicate and manage policies and mechanisms for effective data usage
It’s difficult for businesses to make sense of the trove of data at their disposal. The evolving regulatory landscape such as privacy and General Data Protection Regulation (GDPR) are giving consumers greater control over their personal data, requiring organisations to clarify their stances on data privacy, the management of personal information, and the ethical use of data. And all of this comes at a time when the Fourth Industrial Revolution is creating a growing ecosystem of stakeholders with access to corporate data, making it difficult to understand how to protect data wherever it resides. Fortunately, with the advances made in artificial intelligence (AI), organisations now have the ability to overcome these obstacles. AI provides them with innovative processes, tools, and systems they can use to derive targeted business insights and financial value from their data, which is impelling a growing number of organisations to explore AI’s feasibility to drive value outcomes from data.
What are the broader benefits that could accrue to an organisation implementing a well thought out data strategy?
Due to the growth and advancement in modern technology, the opportunity and potential to leverage data for both decision making and for driving value is a key mandate for progressive organisations. The drivers are the underlying opportunity and potential that could accrue if done right. The benefits are manyfold and can be broadly listed into the following, but may not be an exhaustive list since there are specific nuances based on the industry as well as a business use case.
Better agility: Businesses have always relied on data. Today the volume, variety, velocity, veracity, of the data provides for better insights into evolving strategies based on ever-changing markets conditions, needs and demands.
Better visibility: Smart data use lets an organisation gain visibility to their customer needs, market demands, inventory, supply chain and manufacturing. The key is in being able to unify data from all sources, and making it accessible and actionable to people within the business who need it the most
Better decisions: Data also reinforces the decision-making process and also validates gut decisions by providing a single source of truth.
Insight-driven innovation: With a 360 view of your customers, employees, supply chain, inventory, etc an organisation is in a much better place to leverage insights from data to drive innovation across the value ecosystem including personalisation, reducing friction and greater engagement.
Streamlined operations: With real-time data through automated operations, organisations can track and automatically optimise their operations and processes to respond to dynamic changes both internal as well as external.
Better business continuity: With real-time data from every constituent of your business, organisations can avoid business disruptions arising from many fronts by enhancing their resiliency and avoiding downtime due to disruptions.
Competitive edge: With real-time data, organisations are able to spot the white space and capitalise on it as the first-mover, thus creating a competitive edge for themselves.
On the other hand, there are challenges too in such initiatives and addressing these as a precursor will augur well for transformative initiatives. Organisations grapple with a variety of challenges that have either hampered progress or derailed initiatives. Some of the key ones are:
Lacking a data-driven culture: Culture is a key determinant of any successful transformation. Establishing a data-driven culture is even more difficult when people have got used to making decisions based on gut. This is a key initiative where there must be executive alignment from the board downwards and commitment to see it through.
Lack of ownership by business: In many organisations, data governance is IT-led as opposed to business-led. Often businesses don’t have the technical skills or appetite to learn about data problems. As a result, they distance themselves from these IT transformations. This results in IT-led governance programs and hence less buy-in from key stakeholders.
Lack of trust in existing data: Often business leaders don’t trust data to make informed decisions. The data quality of the systems is so bad that it takes enormous effort to remediate the data and generate a consolidated report.
Lack of a single version of the truth: There are no central enterprise-level data definitions and dictionaries consistently applied across an enterprise. Additionally, there is no central committee to manage the data and information as each business unit creates siloed “excel factories” to support needs. This creates an enormous strain on organisations to later integrate into the single source of truth for the enterprise.
In your view, where do Sri Lankan companies stack up in this? Are they being defensive or offensive in data strategy?
Most Sri Lankan organisations leverage data for traditional data analytics which are typically performance dashboards composed of visualisations. Drill-down capabilities are often centred around answering the question pertaining to “what?”. These are based on common business questions and are predefined sets of analytics that are tailored well in advance to give a specific view to a question. Answering any new question takes time, effort and new data which usually will take multiple days or weeks and assistance from specialists to get done. Thus, these serve as static dashboards that can’t adapt to the changing needs of the organisation. This is where most organisations are other than a progressive few who have embarked on a strategic journey to leverage data with a well-aligned strategy to reinforce/complement their business strategies.
These organisations are looking to get answers to the questions “why? and the “how?” in addition to “what?”. This gives the organisation the ability to dynamically request and combine information to answer business questions but still needs expert intervention to stitch the answers together. The aspiration should be to drive these with a conversational interface that would allow business users to ask questions in natural language. This process is similar to what we experience when getting Siri, Alexa or Google Talk to answer questions we raise. We are far from realising that, but with the right motivation and incentives, nothing is impossible. We must believe that data can help improve the quality of our decisions since gut decisions are only based on a person’s limited knowledge. The data journey only comes to life when we truly believe in this.