Credit: Jennifer Tapias Derch
Understanding and acknowledging the importance of data is a vital step for a company, but what happens next can be a challenge. Many organizations struggle with moving beyond the buzz to actively seeking returns from data.
Organizations in this situation need to create a culture in which all employees see data as their business, according to Barbara Wixom, a principal research scientist at MIT Center for Information Systems Research.
In a new research brief, Wixom and co-authors Leslie Owens and Cynthia M. Beath outlined how companies can “radically escalate” a commitment to data throughout their company.
“Only through action will employees come to believe that data can create value in new ways, that it can do so over and over and over again, and that everyone in the company can play a role,” the researchers write.
Wixom, who also teaches an executive education course on data monetization, said companies should focus on what data can accomplish. Organizations can create a foundation for achieving that goal by establishing data capabilities, developing a data monetization strategy, and “winning hearts and minds” — that is, fostering a companywide belief that data is everybody’s business.
Build data capabilities
Widespread data use requires data that can be de-contextualized and recombined and reused over and over. To do so, companies should establish five data capabilities across the enterprise, Wixom said:
- A data asset capability that generates data people can find, use, and trust.
- A data platform capability that serves up data reliably and quickly, inside and outside of the company.
- A data science capability that uses mathematical and statistical talent and tools to detect what humans can’t.
- A customer understanding capability that identifies what customers need and want, and how data can help meet those requirements.
- An acceptable data use capability that governs data with regard to regulation, law, and ethics.
These five capabilities are important for any business that is trying to see financial returns from data, Wixom said. They can also grow deeper and more advanced over time — for example, the data science capability might lead to machine learning.
Organizations should monitor how the five capabilities are progressing. Leaders should also ensure that any new projects tie into these five capabilities, either by drawing on them or enhancing them.
Design a data monetization strategy
There are three ways that an organization can convert its data assets into economic capital, Wixom said. “At the end of the day, you're either going to change work, change products, or change your revenue streams. That's what makes money … it's the decisions about those,” she said. An ideal data monetization strategy includes a mix of all three.
Wixom said focusing on data monetization would be her first step to building pervasive data use in a company. “If I were a leader, what I would do is get people excited about value-creation,” Wixom said. “Everybody wants to create value.” Wixom outlined three ways of monetizing data:
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Improving with data, the most popular approach, includes using data to redesign business processes and work tasks. This means using data to improve operations by making them faster, more effective, or cheaper.
Data wrapping uses data to improve existing products through things like reports, visualizations, scores, benchmarks, alerts, and automated actions. This makes customers more willing to pay for a company’s services.
Selling data is a more direct way of converting data into money — it means actually selling data sets, insights, and advice. This requires organizations to have the capability to sell information solutions.
Companies should be sure to measure how their data monetization strategy is performing through reports that track changes in operations, changes to products, and new offerings. “Ideally, as each initiative is funded and deployed, the impact of initiatives is linked to financial value on the company’s balance sheet or P&L statement,” the researchers write.
Actively drive pervasive data use by all employees
Tangible outcomes like capabilities and new initiatives alone won’t create the radical change companies need, Wixom said. To drive data use, companies need to make sure employees have access to data and the motivation to use it.
This requires data democratization, the idea that data should be in the hands of every employee. “Everyone’s going to play a role and be responsible for moving the firm forward in new ways of work that include data,” Wixom said.
“It's like data's a team sport and that the entire organization is the team,” she said.
Motivating employees goes beyond sending the message that data is important. “It's inspiring hearts and minds from an involvement and responsibility perspective. It's encouragement to own the change, to embrace data and act in new ways, and really helping data contribute to the firm's success,” Wixom said.
Embracing any one of these three areas — capabilities, monetization, and pervasive use — can lead to the other parts of the process, Wixom said. “It’s like a flywheel in an engine that starts off slowly and then speeds up, that's really what this is about,” she said. “So you can start anywhere. Then you just keep going and reinforcing productive circles.”
Course details for Data Monetization Strategy: creating value through data
