As seen in InformationWeek.

StatisticsBig data is changing the way companies and industries operate. Although virtually all businesses acknowledge the trend, not all of them are equally prepared to meet the challenge. The companies in the best position to compete have transformed themselves into “data-driven” organizations.

Data-driven organizations routinely use data to inform strategy and decision-making. Although other businesses share the same goal, many of them are still struggling to build the necessary technological capabilities, or otherwise their culture is interfering with their ability to use data, or both.

Becoming a data-driven organization isn’t easy, however. In fact, it’s very difficult. While all organizations have a glut of data, their abilities to collect it, cleanse it, integrate it, manage it, access it, secure it, govern it, and analyze it vary significantly from company to company. Even though each of these factors helps ensure that data can be used with higher levels of confidence, it’s difficult for a business to realize the value of its data if its corporate culture lags behind its technological capabilities.

Data-driven organizations have extended the use of data across everyday business functions, from the C-suite to the front lines. Rather than hoping that executives, managers, and employees will use business intelligence (BI) and other analytical tools, companies that are serious about the use of data are training employees, making the systems easier to use, making it mandatory to use the systems, and monitoring the use of the systems. Because their ability to compete effectively depends on their ability to leverage data, such data-driven organizations make a point of aligning their values, goals, and strategies with their ability to execute.

On the following pages we reveal the six traits common to data-driven organizations that make them stand out from their competitors.

Forward Thinkers

Data-driven enterprises consider where they are, where they want to go, and how they want to get there. To ensure progress, they establish KPIs to monitor the success of business operations, departments, projects, employees, and initiatives. Quite often, these organizations have also established one or more cross-functional committees of decision-makers who collectively ensure that business goals, company practices, and technology implementations are in sync.

“The companies that have integrated data into their business strategies see it as a means of growing their businesses. They use it to differentiate themselves by providing customers with better service, quicker turnaround, and other things that the competition can’t meet,” said Ken Gilbert, director of business analytics at the University of Tennessee’s Office of Research and Economic Development, in an interview with InformationWeek. “They’re focused on the long-term and big-picture objectives, rather than tactical objectives.”

Uncovering Opportunities

Enterprises have been embracing BI and big data analytics with the goal of making better decisions faster. While that goal remains important to data-driven enterprises, they also are trying to uncover risks and opportunities that may not have been discoverable previously, either because they didn’t know what questions to ask or because previously used technology lacked the capability.

According to Gartner research VP Frank Buytendijk, fewer than half of big data projects focus on direct decision-making. Other objectives include marketing and sales growth, operational and financial performance improvement, risk and compliance management, new product and service innovation, and direct or indirect data monetization.

Hypothesis Trumps Assumption

People have been querying databases for decades to get answers to known questions. The shortcoming of that approach is assuming that the question asked is the optimal question to ask.

Data-driven businesses aim to continuously improve the quality of the questions they ask. Some of them also try to discover, through machine learning or other means, what questions they should be asking that they have not yet asked.

The desire to explore data is also reflected in the high demand for interactive self-service capabilities that enable users to adjust their thinking and their approaches in an iterative fashion.

Pervasive Analytics

Data analytics has completely transformed the way marketing departments operate. More departments than ever are using BI and other forms of analytics to improve business process efficiencies, reduce costs, improve operational performance, and increase customer satisfaction. A person’s role in the company influences how the data is used.

Big data and analytics are now on the agendas of boards of directors, which means that executives not only have to accept and support the use of the technologies, they also have to use them — meaning they have to lead by example. Aberdeen’s 2014 Business Analytics survey indicated that data-driven organizations are 63% more likely than the average organization to have “strong” or “highly pervasive” adoption of advanced analytical capabilities among corporate management.

Failure Is Acceptable

Some companies encourage employees to experiment because they want to fuel innovation. With experimentation comes some level of failure, which progressive companies are willing to accept within a given range.

Encouraging exploration and accepting the risk of failure that accompanies it can be difficult cultural adjustments, since failure is generally considered the opposite of success. Many organizations have made significant investments in big data, analytics, and BI solutions. Yet, some hesitate to encourage data experimentation among those who are not data scientists or business analysts. This is often because, historically, the company’s culture has encouraged conformity rather than original thinking. Such a mindset not only discourages innovation, it fails to acknowledge that the failure to take risks may be more dangerous than risking failure.

Data Scientists And Machine Learning

Data-driven companies often hire data scientists and use machine learning so they can continuously improve their ability to compete. Microsoft, IBM, Accenture, Google, and Amazon ranked first through fifth, respectively, in a recent list of 7,500 companies hiring data scientists. Google, Netflix, Amazon, Pandora, and PayPal are a few examples of companies using machine learning with the goal of developing deeper, longer-lasting, and more profitable relationships with their customers than previously possible.