Do organizations need to adopt formal data strategies?


Chess: A game of strategyIf data and its "big" counterpart are so important, then it stands to reason that all organizations need to adopt formal data strategies to be successful.

Or do they?

In this four-part series, I'll examine the question in depth.

I'll start today by playing devil's advocate. Do organizations really need to formalize and follow a data strategy?

Generally speaking, there are several main problems with promulgating specific business strategies – and data is no exception to this rule.

Even the "best" strategy guarantees nothing

First, even the "best" or ideal data strategy provides no guarantee of success. As management guru Peter Drucker famously opined, “Culture eats strategy for breakfast."

The world is not static and controllable

Developing an internal strategy gives many employees comfort. We know exactly how the world will play out and this is how we'll respond.

Except we don't.

Many books have made this point, but Everything Is Obvious: How Common Sense Fails Us by Duncan Watts is one of my favorites. With respect to data, what happens if Company X goes all-in on a data source and/or new framework that ultimately doesn't pan out? What happens if Company Y makes a very different bet and succeeds?

Examples run the gamut. Case in point: Twenty years ago, SONY adopted a very logical and intelligent strategy around MiniDiscs but failed miserably. Why?

The Internet happened. Why buy a smaller CD player (and discs) when I can download them and opt not to pay?

So much for strategy. Or, put more colorfully by Mike Tyson, "Everyone has a plan 'til they get punched in the mouth."

Strategies can promote provincial employee mind-sets

As I have seen throughout my career, individual business-unit "strategies" can promote very insular thinking within organizations. Consider the following queries:

  • Do employees in HR routinely think about their organization's marketing plan/strategy?
  • Do folks in marketing often ponder their companies' formal customer-service policies?
  • Does your average VP of finance or sales sit around thinking about the ideal family-leave or vacation policies?

Probably not.

EIU report
EIU report

The most successful companies today do not bifurcate responsibilities to the same extent that their predecessors did. For instance, everyone at Zappos works in customer service irrespective of job title. Frederick Taylor would be outraged. All employees at Google need to be comfortable with making data-based decisions. Why else would the company screen for it with its now-infamous interview questions?

This leads us to the need for a proper data strategy.

Simon Says: A data strategy is neither necessary nor sufficient for success.

All else being equal, it behooves an organization to think about innovative ways to use data. (I'll address this more in the following post.) Whether or not it results in a formalized strategy is less important.

For now, recognize the limitations of all strategies, including and especially data ones. Most dangerously, the presence of a separate data strategy (intentionally or not) can easily reinforce the IT-business divide, something that many mature organizations struggle to overcome.


What say you?

In the next post in the series, I'll discuss what an effective data strategy looks like.


About Author

Phil Simon

Author, Speaker, and Professor

Phil Simon is a keynote speaker and recognized technology expert. He is the award-winning author of eight management books, most recently Analytics: The Agile Way. His ninth will be Slack For Dummies (April, 2020, Wiley) He consults organizations on matters related to strategy, data, analytics, and technology. His contributions have appeared in The Harvard Business Review, CNN, Wired, The New York Times, and many other sites. He teaches information systems and analytics at Arizona State University's W. P. Carey School of Business.

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