Momentum towards data and analytics is now pushing even the most resistant towards their adoption. So what does it take to transform your business and switch over to the new world of evidence-based decision making? David Reed finds out.
All over the UK, the lights are going on. They are being installed over data scientists, switched on above the servers hosting single customer views and wired up to the lamps in the coffee rooms where customer insight teams huddle. You could call it, literally, the “light bulb moment” when a business realises the importance of investing in data and analytics as part of a “datafication” process.
Adopting these new tools and processes is no simple matter. Evidence-based decision making can be a profound challenge to the prevailing business culture (see the article on page 28 for more proof). Leaders want to exercise their authority and can struggle when it is challenged by cold, hard numbers.
Yet few CEOs will ignore their financial director if told revenues are down or the share price is in trouble. When the numbers stack up, the logic becomes irrefutable. Fortunately for those in the data industry, all the financial indicators from investing in datafication are positive. According to the IBM study of CMOs carried out last year, the top 20 per cent of marketers who have already adopted data-driven marketing for real-time personalisation are seeing gross profit growth 1.8 times higher than the average, net income growth 3.4 times higher and three-year stock price growth up to 2.4 times higher than the competiti
That is enough to make any chief executive pay attention - and to get their CFO reaching for the cheque book. But that is not the whole story. Transforming a business is a bold step with many stages.
Karina Murtagh, business change manager - professional game, at England and Wales Cricket Board, launched a customer engagement programme in 2011 at a time when nobody at ECB or the 18 first-class cricket clubs had the word “customer” in their job title. The naming of the project was quite deliberate. “I took away any reference to ‘CRM’ because it has systems and technology connotations and sets the IT department’s hares running. If it is seen as a systems project, it becomes less about engagement with customers. So the name helped me to connect with more people in the organisation,” she says.
The first stage of the transformation towards insight-driven customer-centricity involved a review of every business against eight key areas, of which only one was technology. This revealed that customers were thought about in many ways, but not at a strategic level. “It was about tickets and products, so there was a mindset shift required once it was accepted that understanding customers was going to lead to commercial gains,” says Murtagh.
Through workshops with 180 people across the game, covering everybody from groundsmen up to commercial directors, she was able to learn how they currently engage with customers and explain what the new process would mean once they gained a better understanding of them. Importantly, it meant delivering tailored strategies for each club, rather than a one-size-fits-all solution.
“There are big differences between Lords and The Oval and smaller grounds with one-tenth the number of staff. Getting people in a room to talk about how they engage with customers drove buy-in throughout the organisation,” says Murtagh. In some cases this approach also flushed out disconnected processes, such as the marketing department launching a ticket offer on the day the box-office call centre was closed. Another surprise was that fewer than one in 20 knew the average age of cricket fans - many believed their customer was aged over 80 and probably did not have an email address, when it is actually a reasonably tech-savvy 57 year-old.
As a result of this process, clubs have adopted customer engagement at a rate and style that suits them. For some, that has meant the introduction of a CRM system, for others it is a focus on customer insight. “Our vision was to have a game-changing approach to customer management in cricket. We didn’t set specific goals, like having a CRM system in place within three years. The goals were about change and taking temperature checks to see if it was occurring,” she says.
The programme is ongoing with the focus now on maintaining momentum and providing more support to less able clubs while keeping a light touch on those progressing faster. “It is about being the energy provider,” says Murtagh, who picked up the Customer Champion and Grand Prix awards at this year’s IQ Talent Awards for her efforts.
What the ECB example proves is that organisational complexity need not be a barrier to datafication. Even so, few businesses are starting with the same blank sheet. And while the IBM study shows gains for early-adopters, are similar uplifts still possible when a business comes late to the party or where other approaches are successfully driving the bottom line?
James Morgan, head of MI at British Gas Energy, says that the desire to adopt data and analytics often depends on where a company sits on the maturity curve of its sector. “If it is growing rapidly and expanding and seeing strong profits, it often doesn’t see the need to invest heavily in this area. That growth allows people to get by on gut-feel.”
Once a marketplace matures, however, it becomes less possible to make headway without a better understanding of the business and its customers. “When directors ask a question, they can’t understand why they can’t get the answers. You tend to see a lot of hypothesising around why things didn’t work. That is what can trigger a change in mindset,” says Morgan.
Typically, these growth businesses lack much in the way of a data and analytical infrastructure, which leads them towards management consultancies which can bridge the skills and capability gap. While this does not build a knowledge base within the company, it can prepare the ground for a business case for datafication. From consolidation of IT systems and reduced data latency through to a reduction in payments to third-parties, there are always cost-savings which can be identified as an argument for investing.
Morgan says that data practitioners can gain more traction if they are visible and influential in their business. “If you get identified by the CMO or the CFO, that can drive a project. But you really need the support of the CEO and the board to make it happen. You have to go up and across the company,” he says.
Just as Murtagh kept the language of her customer engagement project non-technical, so data practitioners and analysts need to do the same. Says Morgan: “CEOs don’t care about the detail. The savvy ones have worked out what is important, but they are not fascinated by the technical details. What captures their attention is the big picture and financial outcomes.”
Datafication is not about making all managers capable of running a regression analysis. It is about helping them to think through different courses of action with better information, providing historical reporting, trend forecasts and scenario models. Both sides will have to learn how to work together and understand a little more about each other’s language in order to succeed.
This could be a stumbling block for projects because data practitioners are often not natural leaders. “People get into this through IT or analytics and a fair few through planning. Even then, it is not a traditional starting point for CEOs of the future. In terms of their personality types, they don’t often end up in leadership roles, barring the exceptions like Jeff Bezos and Steve Jobs,” he warns.
Two-thirds of people in the world are extraverts and they set the culture within any organisation. Yet the work of data and analytics is done by introverts who are then being asked to step forward and present their findings to others. It is not hard to see how this could slow down or hobble a project.
Simon Kaffel, head of information management at O2, admits: “By nature, I am one of the most introverted people. I have had to force myself to change because I can see how organisations operate and what works and what does not. I’ve been fortunate to have had managers and co-workers who’ve worked with me to develop my ability to interact with other people.” While working at Sky, one of those bosses had previously been head of database marketing which was an advantage in terms of his understanding of the challenges, but equally “it made me push further as I understood the art of the possible,” notes Kaffel.
He points out that there need to be sufficient incentives for inward-focused people to undertake this kind of self-transformation. “In the past in the data world, there was a clear career path from junior analyst to senior analyst, but no further. We have reached a stage where, in order to progress, people will have to come out from behind their screens and present to their clients. If they can do that, they will be able to push for promotion because the business will realise the value of that interaction,” says Kaffel.
In making that progression, data managers and analysts will also find themselves moving away from the technology and process that first drew them in. Just as there are relatively few football players who turn into great managers, this is not always a comfortable step. At the same time, practitioners used to the objectivity of data will come up against the subjectivity of company politics.
“How many people feel comfortable telling the CEO no? It is only two letters, but one of the biggest words you can use in a work environment,” says Kaffel. Even at organisations which might be considered datafied, there will be pockets of resistance, he notes: “Creative marketers don’t want to get their heads around it - they see it as something for the ‘pointy headed people’ in the back room.”
Despite this, it is becoming evident across every function that traditional ways of working do not deliver the same traction in the market and financial or performance outcomes they once did. Adding data and using analytics to understand the current and future situation is increasingly the only way to get a boost. As Kaffel says, “you don’t need to be a coder, you just need an awareness and an interest in measurement.”
As a starting point towards full datafication, companies might want to understand what their existing capabilities really are. “It is extremely hard for a business to gauge whether it is datafied enough,” says Peter Galdies, technology director at DataIQ. “They need to look outwards at what similar organisations are doing and how.”
That some companies are achieving accelerated growth, especially in the digital space, is not always down to the impact of data and analytics, of course. Many highly customer-centric start-ups online have yet to generate any significant revenue, despite their eye-watering market valuations. Galdies argues that a company should ask itself, “are we capable of driving revenue and growth without data and analytics?”
At minimum, any company can benefit from enhanced business intelligence, if only to give a more objective view of its real position. Galdies says that an audit capability, such as that offered by DataIQ, helps to reveal what the company really knows about itself. “You have to ask yourself what you need to know to make a change in the way the business sells in order to increase that sales rate. What do you need to know in order to understand your customers and their motivations?” he asks.
Typically, non-datified companies lack analysts who can provide that sort of insight, even if data resources exist. It may be a CMO who decides to fill that gap or even a more strategic role, such as the chief data officer (CDO), although these are rare in the UK. Some organisations, such as RBS, have embedded the analytics function within the finance department where data is increasingly being included on the risk register. “Ultimately, somebody needs to take responsibility,” says Galdies.
If your business is only on the lowest levels of the datafication maturity curve, it might seem as if you have missed out on the gold rush. After all, the last 12 to 18 months have seen unprecedented levels of interest and discussion about data across the generalist business media.
But Stephen Mills, associate partner, big data and analytics at IBM, argues that, “it has got to a tipping point where many businesses have been exploring it and done proofs of concept and have now understood whether this disruptive technology is of value.” There is no “silver bullet” to fix any absence of capability, he argues, although top-down support is quintessential - something everybody interviewed for this article also stressed.
“A good example is Channel 4, where a new CEO came in as a change agent, understood the market and what he was trying to achieve and saw how data could be a large part of that,” says Mills. At the same time, it is important to get bottom-up engagement if the new data-driven culture is to become permanent. “You need to complement your existing staff with people who have new skills. That is not just about having a data scientist - although you do need those to create the models that drive your processes - it is about how you change those processes to ensure you support frontline staff with enhanced analytics,” he says.
In frustration at slow progress within their companies, some functions launch “guerilla projects” which deploy new resources outside of the corporate framework. But Mills argues, “if you want to be a lead player, you have to drive the value of data together right across the organisation. That is a longer journey.”
Datafication rarely happens overnight, even though it can be introduced rapidly. Much depends on the culture and flexibility of the business as well as its ability to absorb change. Some will get there quicker than others. But very few are now completely refusing to switch on the lights.