Keeping Up With Data #90
Strategy&’s 2022 Chief Data Officer Study contains the chart above, which evidences the increase in frequency of data being mentioned in the annual reports.
Two-thirds of companies in the study are talking more about data to their shareholders than five years ago. On average, this group mentions data 52 times in their latest annual reports.
What we might see is a similar pattern to technology, digitalisation, or ESG. First, an increased interest from investors, customers, and other stakeholders required companies to share their stance in the annual reports. Then the topic became a standard board agenda item. And then programs, initiatives, and transformations were launched.
This process was often accelerated by the creeping costs of the agenda — like in the case of technology or digital transformation. Let’s hope data will become a standard board item because of the value-creating and value-preserving opportunities. Not because of out-of-hand costs.
Data is a CEO opportunity.
My Thursday evening WFH reads (to paraphrase Barry Ritholtz) support it.
First article talks about data-driven value creation, second about new types of risks companies are facing in the digital era, and the last one mentions data as a prominent aspect of successful digital transformations.
- Data-driven value creation in portfolio companies: With many value levers already being commoditised, data provides an opportunity worth exploring. There are five key requirements for success: (1) clearly defined goal — how will a data strategy support the business strategy; (2) robust understanding what data exist; (3) objective evaluation of existing resources and capabilities in the light of the strategic ambitions; (4) investment in people, infrastructure, and processes; and finally (5) building a company-wide acceptance of the value of data. Once a data strategy is established internal and external data can be used strategically for value creation. The report further provides many examples of how the value creation could look like. (PwC & Eagle Alpha)
- Future of risk in the digital era: While data presents a great value-creation opportunity, it also introduces substantial risk. Companies need to be managing risks related to the black box of AI. And there are many! From algorithmic, data, or design risks, to ethical and legal ones. As the report puts it: “Data carries tremendous value for organisations while creating new challenges around transparency, accuracy, security, privacy, social expectations, and legal requirements.” And there are many more risks about governance of automated processes or cybersecurity. A healthy reminder that every company needs to balance the offensive and defensive elements of their data strategy. Unfortunately (or fortunately?), the equilibrium is different for every business, and it also keeps changing in time. (Deloitte)
- Democratizing Transformation: The investments into digital transformation are massive and growing (forecasted to be $2.8 trillion in 2025). Why are some companies achieving great results, and others are failing in their efforts? The prominent authors are saying the key differentiator is what they call a ‘tech intensity’, which refers to the extent to which employees put technology to use to drive digital innovation and achieve business outcomes. The more democratised tech, digital, and data tools and capabilities are, the more likely is the organisation to succeed. Investing in the (right) technology, developing data and digital skills, and designing an architecture where human capabilities and technology can work in synergy to drive innovation is the way to become a digitally native organisation — an organisation with democratised data-driven innovation, accessible and easy-to-use tools, agile culture, end-to-end ownership, and highly efficient machine-learning technology. (HBR)
Creating value, mitigating risks, or driving transformations are not easy tasks. Luckily, a (hopefully) relaxing and energising weekend is starting soon.